Can my Tenant be my Friend?

The answer to this question is yes, but you need to be very careful.  You want to be positive and encouraging to your rental community, but you also want to make sure that you’re professional and not taken advantage of. Gray area occurs when you meet a new tenant, you become familiar with one another, and then this evolves into a friendship.  Also know that if a friend or family member applies to your property, they will have to be treated the same way as everybody else!  The bottom line is that you need to be able to hold your tenant to the terms of the contract in the lease regardless of your familiarity with the individual.

The Struggles that Occur When Leasing to Friends and Family

Friends, family, and investment properties don’t mix well.  While you can never deny outright deny an applicant with out verifying their information, it’s advisable not to be actively seeking to have friends and family in the property.  Always advertise your properties in a standard medium.  If a family member asks to rent to you, you will have to inform them that you must screen and qualify them like everybody else.  It’s OK to vocalize to them your concerns about how the relationship will have to change if they decide to rent to you.

In most cases, you already have an established relationship with your friends and family.  Signing a lease with them will mean completely changing the relationship that you already have.  Put in the simplest terms, a transaction such as paying rent serves to reduce a relationship into financials.  If your nephew is going through a rough financial period and he is struggling to pay the rent to you each month, you might be tempted or even feel obligated to show leniency because he is your nephew.  Being helpful and accommodating is a socially implied role to play with friends and family.  Unfortunately, this is an inappropriate Landlord-Tenant relationship.  You may be forced to sever or strain some of the personal connections you have in order to collect on that rent.  It’s best not to get yourself in that situation in the first place.  You’re running a business and you need to be working with your tenants in an objective manner.

The Advantages of Leasing to New People

By not having an original relationship with your tenants, you will be able to establish rules and parameters for the business relationship as landlord and tenant.  As a business relationship, you will likely sign a lease or a rental agreement, establishing what parties can and cannot do in regards to the rental property.

You will also feel more comfortable running background checks on these individuals to ensure the prospective tenant is safe and secure.  It is not realistic that you would run a background check on your family, but if you are already doing this on other tenants, you would have to in order to lease that family member into your property.

Fair housing laws require equal screening and treatment of all applicants.  Even if you follow all of the same procedures for the family member as other applicants, you will still likely find yourself under greater legal scrutiny simply by the nature of this individual being somebody you are already familiar with.

Can a Tenant Become a Friend?

I think good marketing and retention of a rental property requires that you be on good terms with a tenant.  By no means is that discouraged!  Being on great terms with a tenant might look something like a friendship.  You’re much better off having started off with this person simply being a tenant and then becoming a friend rather than the other way around.  This individual is aware of what is expected of them and is less likely to take advantage of being the property manager’s buddy.  Be careful not to allow the relationship to become unprofessional as this can dramatically compromise your ability to effectively manage the property without any problems.  At the end of the day, the person is still your tenant and as such must be held to the terms of the contract.

In the real world, you may naturally become close friends with a tenant and that tenant may desire to socialize with you outside of work.  While there isn’t anything inherently wrong with doing this, it is strongly advised against.  If at the end of the lease the tenant moves to a new property that you do not manage, socialization is no longer problematic because you are no longer in the confines of the business relationship that you had.  In the end, if you choose to pursue that relationship with a current tenant, remain aware of your responsibilities as a property manager.  Remember that a true friend is not going to put you in a conflicting position for your line of work.