I'm renting out my 5 bedroom home in a very nice area and neighborhood, etc to a family that is having some hard times. There home is being foreclosed on. My home is up for sale and the market is bad. They're daughter goes to school with my daughter. I figure I would help them out if they help me out.

He is a realtor (changed professions recently due to medical problems). The wife works part time and they have two teenage children and one dog.

Already, he is having a problem coming up with the damaged deposit ($3000) and is not yet out of his foreclosed home. I'm giving them a deal on the house that would normally rent out for $2000--he I would rent at $1200. Am I making a BIG MISTAKE and asking for headaches. What happens if he can't make rent? Will it cost me more in the long run to take a chance on these people with eviction, etc.

I know the real estate market is bad, but he's not able to sell enough to pay for his house and you're going to let him live in yours very cheaply while he tries to sell it? Where's his motivation to sell your house?

Hello JC:

The precautions you should take, are the ones you can't take. That would be several months rent in advance. At least 2, plus a deposit equal to the rent.

But, you didn't do that. Let's hope it doesn't come back to bite you.

excon

The deposit is a lot. Can you break that up into payments that come with the rent? A big deposit is my recommendation. As a renter, if I paid a deposit that big, it would be worth my while to take good care of the house so that I could get all, or most of it back.

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Originally Posted by JCISLO

I'm renting out my 5 bedroom home in a very nice area and neighborhood, etc to a family that is having some hard times. There home is being foreclosed on. My home is up for sale and the market is bad. They're daughter goes to school with my daughter. I figure I would help them out if they help me out.

He is a realtor (changed professions recently due to medical problems). The wife works part time and they have two teenage children and one dog.

Already, he is having a problem coming up with the damaged deposit ($3000) and is not yet out of his foreclosed home. I'm giving them a deal on the house that would normally rent out for $2000--he I would rent at $1200. Am I making a BIG MISTAKE and asking for headaches. What happens if he can't make rent? Will it cost me more in the long run to take a chance on these people with eviction, etc.?

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Speaking as a landlord - if the tenant hasn't been able to come up with the deposit they haven't been able to come up with the rent a couple of months down the road. A $3,000 deposit on a $1,200 monthly rent does seem high to me, though

Depends on how much you want to help them and how much money you can afford to lose.

Just how good a friend is his child to yours?

Not only are you running a risk with someone who it would seem is having a very hard time meeting his obligations, but, you are also running the risk of putting your child through more hell when all of this falls apart and those two children are left with the mess the adults have created.

I would rent to someone with no personal connections at all.

Sometimes when you are trying to do a good deed the good deed comes back to haunt you. As my mother always told me "no good deed goes unpunished". If you are willing to accept late rent payments or no rent payments due to some sob story, then rent to them BUT beware of just how long you put up with sob stories from them. Be ready to evict them friends or no friends. It's nice that you wish to help them in these hard times, but if you cannot afford this financially then please don't help. I am sure they can find some other place to live that may not be so nice or expensive in the meantime.

As a past landlord, I have never ever did a good deed that did not come back and bite me big time. In most cases like this, I ended up with them not paying for several months and then having to evict them, and that destroys any friendship ever. Also if you are evicting them, guess who is not careful about hurting things when they move.

I have tried to "work things out" on deposits, and that has always failed and I lost money on damages every time.

I have tried lower rents, and doing work for rent, that failed even worst completely.

The issue here is that most likely they can't afford your home either and need to find something in the 100's maybe 800 or so a month with a 400 to 800 deposit, that they can afford. Helping them find a home they can afford property would be the most help they can get

Sometimes a big heart just gets you into a lot of sticky situations. I have a very close friend who has done the same with his rental properties... reached out to those in need and was put into very bad situations... but some worked out well though. It is a little hit or miss. It may work out once they get over the foreclosure and back on their feet a bit. It sounds like you have already drawn up a lease drawn up, but if not, consult a Real Estate attorney and have them do it. They will know all of the Tenancy Laws for your area. An option is to still have the house on the Market. This is also hard, because of Tenancy laws in which the landlord can not come to the home without 24 hours notice, etc. It may be hard to have showings (due to same Tenancy Laws), but if you advise your tenant that this is what you want to do and have them on a month to month lease, you may be able to sell AND have a renter at the same time. If they are on a year to year lease, and it sells, the new owner will have to grant the new lease to the end of its term. This may be a good thing for someone looking for investment property in your area... and a bonus to them to already have a renter in place. Although, the rent may be too low for the new owners and the rent would go up after the existing lease is over. I hope this helps and good luck.