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If you’re a landlord or property manager, you know how important it is to screen tenants properly. This becomes more complicated when you consider renting to friends or family members. It’s one thing to tell a stranger you need to run a credit check and confirm their income level; it can feel very different asking for this information from someone you know. The time-honored phrase “It’s best not to mix business with pleasure” comes to mind. As in many things, there are pros and cons to this. Here are some things to consider.

Pro #1: Personal Knowledge of Their Background and Personality

Depending on who you’re renting to, having a friend for a tenant could be great. Unlike renting to a stranger, with a friend you already have a good sense of their personality and lifestyle. You know whether they’re reliable and how well they maintain their current home. Ideally, this is someone you know you can communicate with in good times and bad, and you trust them to tell you when something at the property needs attention.

Pro #2: Helping Someone in Need

Another positive aspect to renting to someone you know is that it feels good to help someone who needs housing. If you have a vacancy and know a friend or family member who needs a place to rent, why not let them know you have a rental available in their price range?

Con #1: Expectation of Preferential Treatment

However, before you decide to rent to a friend, consider the downsides of such an arrangement. Sometimes friends expect special treatment. If your friend has trouble paying rent on time, they may expect leniency. They may also believe that your rules don’t apply to them, rules like “no pets allowed.” Or, they may expect you to rush over every time there’s the slightest problem with the property, because, well, that’s what friends do for each other.

Con #2: Negative Effects on Your Relationship

If you only have one rental property and you really don’t care about collecting rent on time (or at all), then by all means, rent to someone you already have a relationship with. But if you expect your personal relationships to blend harmoniously with your role as a landlord, you may be disappointed. Even when you set clear expectations from the start, relationships can sour.

As the landlord, you must enforce rules and settle disputes that arise between tenants. This may force you to go against your friend’s wishes, causing tension between you two. And tension between you and a family member can extend to other family members. If you evict your uncle, for example, will your cousins stop talking to you?

A Word to the Wise

Trust your gut. If you think renting to a specific friend or family member is a bad idea, don’t do it. If you’re getting pressure to rent to a friend’s deadbeat son or off-the-wall niece, offer to do so as long as they agree to co-sign the lease. If they balk, that will tell you a great deal – and confirm that you need them to cosign. If you decide to consider renting to family or friends, screen them as you would any other tenant and make it clear that the rules do, in fact, apply to them. Not only can preferential treatment cause hard feelings with other tenants, it can land you in legal trouble. So, have an honest conversation up front. Talk to them about your strict leasing policies, the rules of the property, and how issues that arise could affect your relationship. When you set clear expectations with your friend or family member from the beginning, you’ll be less likely to have problems when they become your tenant.