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Are you a new landlord? Here’s why you shouldn’t rent to family or friends.

If you are a new landlord that is considering renting your Waco, TX home to a family member or friend, you may want to reconsider. Here are three reasons why:

1.) When you rent to a family member or friend, you could lose out on certain tax deductions.

Sometimes, when landlords rent to a family member or close friend, they set the rent at a reduced rate. This is a big mistake. If you rent the property for less than fair market value, the IRS may not view it as an investment, meaning you could lose out on some serious tax deductions come April. Do remember that it is always best to discuss any tax issues with your accountant, who is best equipped to advise you on what tax deductions to prepare for and take.

2.) It’s almost impossible to deal with and handle issues that arise.

Think it will be easy to address rent problems with a family member or friend? What about the pet your lease says they can’t have? Or loud parties that have drawn the attention of neighbors and police? Think again.

More often than not, problems will arise since a family member or friend won’t view you as their actual landlord – but as their “old college buddy” or “sibling.” This means rules that would otherwise be non-negotiable (and in writing) for other tenants are considered mere guidelines that should be followed (and don’t necessarily have to be).

We cannot tell you how many of these cases end up in court, leaving severed relationships and empty wallets behind. Any landlord who has rented to family or friends in the past will advise against it, saying it is hard to recover from – both financially and emotionally.

3.) A family member or friend may not respect your boundaries.

Because a family member or friend feels comfortable with you, they may expect you to handle non-emergency issues and requests with urgency. Some may try to conduct repairs themselves or even bypass your property management company altogether. This can be pretty costly and time-consuming, making your relationship feel transactional.

So what is a new landlord to do? Hire a property management company to locate and manage tenants for you.

If you are a first-time landlord who’s worried about finding the right tenant, a property management company can screen potential tenants – conducting background checks, credit checks, and reference checks to mitigate any risk. They will handle rent collection and maintenance requests and ensure that your rental property increases in value. Best of all, you can keep your personal life and professional life separate (as they should be).

Being a new landlord is tough – but Real Property Management makes it easy.

We are a locally-owned and operated property management company serving Waco and Central, TX. With over 30 years of experience in residential property management, our landlords and tenants receive exemplary service and support. Contact us today at 254-651-0576 to learn more. We look forward to hearing from you!

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

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