Renting a property to a relative may sound like an advantageous move, especially if you are pretty close to that family member. On the other hand, doing this may also lead to unforeseen financial and emotional problems. Prevent this from happening by considering the three factors below.
Charge the Right Amount of Rent
It may be tempting to give your relative a huge discount knowing that he is part of your family. Doing this, however, may put your business in jeopardy, especially when it results to unprofitable trade. Avoid this by making sure that you charge the right amount of rent; consider the quality and size of the property, its location, and the amount you have invested. If necessary, explain these costs to your relative so the both of you can reach a beneficial agreement.
Ask them to Sign a Lease
Verbal agreements do not always work between family members. No matter how much you trust your cousin, nephew or uncle, it is still important to have your rental agreement in writing. It may be hard to ask them, but doing so will not only protect your property but also your relationship. Remember that without a lease, you cannot lawfully impose rules such as keeping pets, smoking in common areas, and payment deadlines. There are family lawyers in Townsville that can help you prepare the lease, which your relative should sign at least a week before moving in.
Check the Laws of Your State
Do you know that some states in America prohibit renting properties to relatives? For example, the government of Baltimore County in Maryland does not require homeowners to register their properties rented to relatives, but only under certain conditions. Maricopa County in Arizona, however, requires otherwise. Before asking your relative to sign a lease, make sure that you are following the property laws of your state. Doing this does not only prevent you from getting into trouble but also protects your business as a whole.
Keep your rental business safe and maintain a happy family relationship by putting these three considerations in mind. Renting to a relative can be extremely beneficial, particularly when you keep transactions fair and professional.