{"id":5290,"date":"2015-08-06T01:00:26","date_gmt":"2015-08-05T15:00:26","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5290"},"modified":"2015-08-06T01:00:26","modified_gmt":"2015-08-05T15:00:26","slug":"renting-to-family-members","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/renting-to-family-members\/","title":{"rendered":"Renting to Family Members – Carolyn Majda"},"content":{"rendered":"

 
\nIn your attempt to find the best possible tenant, sometimes it\u2019s a temptation to pick a family member and maybe rent to them. You think, \u201cOh, well. I\u2019ll put Aunt Mary in there, or our little cousin, or even our son or daughter, because I know what they\u2019re like.\u201d There are some things that you need to be aware of. In today’s show we talk with\u00a0Carolyn Majda<\/strong>, from Terri Scheer Insurance.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 In your attempt to find the best possible tenant, sometimes it\u2019s a temptation to pick a family member and maybe rent to them. You think, \u201cOh, well. I\u2019ll put Aunt Mary in there, or our little cousin, or even our son or daughter, because I know what they\u2019re like.\u201d There are some things that you need to be aware of. Let\u2019s find out what they are.
\nJoining me now is Carolyn Majda from Terri Scheer Insurance. Carolyn, do you see this very often?
\nCarolyn<\/b>:\u00a0 We do tend to see it. I wouldn\u2019t say it\u2019s the most common form of renting, but certainly, we do see it, especially if people are in the country \u2013 rural areas \u2013 and their children might move to the city for studies or things like that. We often see it.
\nKevin<\/b>:\u00a0 Of course, there\u2019s nothing wrong with doing it, provided you treat it like a business and are prepared to treat them like a normal tenant.
\nCarolyn<\/b>:\u00a0 Absolutely, and it really depends on each family\u2019s circumstances, obviously. But I think keeping the emotion out of it and making sure that you do remember it\u2019s an investment property \u2013 you\u2019re investing for a reason \u2013 and make sure that whoever the family member is does respect the fact that it is a rental property and they still have obligations whether you\u2019re their mother, or their aunt, or whoever you are.
\nKevin<\/b>:\u00a0 Give us the ground rules. What should we be aware of if we are going to go down that path?
\nCarolyn<\/b>:\u00a0 Certainly. Make sure that you have a proper lease in place. A verbal agreement is all well and good until something goes wrong, and things can go wrong. You never know what\u2019s going to happen with family, so we would certainly recommend having a lease in place.
\nAppointing a property manager even takes it a little step further in having somebody managing it for you. The property manager is looking after it on a day-to-day basis, and you\u2019re not having to get too involved. That keeps it more of a business-type relationship as opposed to an emotional family relationship.
\nKevin<\/b>:\u00a0 Yes, because the temptation would be great there \u2013 wouldn\u2019t it? \u2013 given that it\u2019s someone you know to say, \u201cWell, look. We\u2019ll just do this rental agreement between us and manage it myself.\u201d
\nI mean there\u2019s one thing about managing a property with a tenant you don\u2019t know, but it\u2019s probably even worse with someone you do know.
\nCarolyn<\/b>:\u00a0 It really could be. Some of the things that we see, of course, is people who don\u2019t pay the rent on time because it\u2019s mum or dad or whatever. They\u2019ll say, \u201cLook. You just hold me over this month, and we\u2019ll get it to you next month.\u201d Then next month becomes the following month, and suddenly, you\u2019re in a bit of strife.
\nSimilarly, with caring for the property and keeping it neat and tidy \u2013 whether or not the owner would actually do inspections as often is because they might have seen that because there\u2019s a family member in there that they\u2019re looking after the property properly. It\u2019s not a given that that does happen.
\nKevin<\/b>:\u00a0 For any owner of an investment property who wants to manage their own property, what services do you provide through Terri Scheer Insurance?
\nCarolyn<\/b>:\u00a0 We do offer an insurance policy for self-managed landlords. Previously, it was only available if you had a property manager, but we do recognize that there are a lot of investors who almost have their own little business in investing and know how to look after a property. There\u2019s certainly insurance available now to assist to help cover those things that you just can\u2019t control. That\u2019s things like your loss of rent and the damage that can be caused by tenants.
\nKevin<\/b>:\u00a0 What are some of the classic areas where you\u2019re finding claims coming in, where people are being protected?
\nCarolyn<\/b>:\u00a0 Loss of rent is obviously the most frequent claim that we have, and there are various reasons that people might not be paying their rent. It could be something like hardship where they\u2019ve lost their job or something like that and they\u2019ve been released from the bond obligations, right down to your absconding tenants, things like that. Loss of rent is certainly right up there.
\nQuite often with a loss of rent claim, there will be a malicious damage claim, as well, especially if a tenant has been evicted. They might be very angry about that, and so their parting gift to the landlord \u2013 if you like \u2013 is a couple of holes in the walls or something like that.
\nI spoke with a property manager once who was telling me that he served notice on a woman, and she had just come back from doing her grocery shopping. She had a carton of eggs in her hand, and she proceeded to throw the eggs all around the lounge room walls and up into the ceiling fan. There was just egg splattered everywhere.
\nThey\u2019re the types of things that can happen. You just don\u2019t know.
\nKevin<\/b>:\u00a0 No, you don\u2019t know. I think it gets back to what you said right at the very start, too \u2013 no matter what you\u2019re doing, whether you\u2019re managing it yourself or whether you\u2019re getting an agent to manage it for you, you must treat this like a business because that\u2019s what it is and to make sure that you get the leases in place and run it like a business.
\nCarolyn<\/b>:\u00a0 Absolutely. I think the other thing, too, is making sure that if your tenants do get behind in their rent that you act really quickly to try to reduce that loss. Generally, with a landlord insurance policy, you\u2019ll need to show that you\u2019ve taken steps to try to mitigate that loss. You can\u2019t just let it go and not serve notices on tenants. Whether they\u2019re your family or not, you still need to do that if you\u2019re running it like a business.
\nKevin<\/b>:\u00a0 Very good advice. I\u2019ve been talking to Carolyn Majda from Terri Scheer Insurance. Carolyn, thank you very much for your time.
\nCarolyn<\/b>:\u00a0 Thank you.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In your attempt to find the best possible tenant, sometimes it\u2019s a temptation to pick a family member and maybe rent to them. You think, \u201cOh, well. I\u2019ll put Aunt Mary in there, or our little cousin, or even our son or daughter, because…<\/p>\n","protected":false},"author":176692471,"featured_media":5291,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,13,25],"tags":[101],"class_list":["post-5290","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-latest-story","category-sponsored-channels","tag-podcast"],"yoast_head":"\nRenting to Family Members - Carolyn Majda - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/renting-to-family-members\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Renting to Family Members - Carolyn Majda - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  In your attempt to find the best possible tenant, sometimes it\u2019s a temptation to pick a family member and maybe rent to them. 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