You have a rental property. A member of your family needs somewhere to live. If they were to rent out your property, perhaps even at a discounted price, they’ll have a home and you’ll avoid an agent’s commission and the usual pesky tenant problems. It sounds like a match made in heaven. However, this is one of the most common landlord mistakes that property owners make. Rather than assuming nothing will go wrong, it’s wise to consider what could go wrong and what you would do in such a situation.
Property Management Orlando: Financial Risk
If you charge your family member rent that’s lower than the market requires, you’re going to lose money. You’ll have less cash flow and it will be more difficult to raise the rent on someone you know. You’ll need to consider what you’d do if rent was late or not paid.
Property Management Orlando: Lease Enforcement
Then there’s the potential for other problems. Often when a landlord is renting to a family or friend, they’ll relax their usual standards and make various concessions. Perhaps they won’t have a binding lease in place or a security deposit. When the terms of agreement aren’t clear in the beginning, both parties will make their own assumptions about responsibilities based on the fact they know each other. If things go bad, the situation will often end up worse than a normal tenant/landlord conflict. And it may jeopardize the personal relationship between the parties.
Instead assuming nothing will ever go wrong, make plans for what you’ll do if something does happen. Determine how you’ll handle maintenance and what you’ll do to collect late rent. Consider how you’ll handle damage to your property and what you would do if you had to issue a late notice to your daughter or evict your uncle.
Avoiding Landlord Mistakes
There’s an old saying that says to never mix family and finance. It doesn’t have to be that extreme, but it is a good idea to avoid potential problems. Hire a professional Orlando property management company to act as a buffer between you and your family member. This will help you maintain your investment and protect your personal relationship.