Should You Rent to Friends

Should you rent to friends, family or people you know? Property manager Joe White gives his thoughts on this.

Read transcript here:

Today’s property management question comes from Laurie Wells.

“I got an application in and it turns out to be the grandson of a very dear friend. What should I do?”

That’s a tricky one. Most of the people in my life know that I own a property management company-and a big part of that is because of the podcast that you do on the regular-and so it’s very common for folks to contact me looking for rentals or passing my name along when they have friends or even their own children looking for rentals. I always just brush it off and say, “I’m sorry, I actually don’t have any part in the selection process in the company,” and that’s true.

Due to the Fair Housing Act, I have to treat every tenant identically, so I can’t do any particular person a favor. In doing someone a favor, if I ever were to get audited, they’re going to want to know the particulars of that situation and it’s going to go badly for me and for my property management company. So, we have to treat every tenant identically, and we do! We make sure things are done by the book, so I purposely don’t get involved with friends’ applications in any circumstance.

I tell folks this, too, and unfortunately it’s never gone well for me. I do think I’ve put people out when they reach out and say, “Joe, this is so great-my kid’s looking for a place and you’re a property manager! This is kismet!” and I say-politely-“Yeah, no.” I usually tell folks it’s not my job to sell property for what’s fair, and this is true. I tell them we’re not the place to go if they’re looking for a property with inexpensive rent. We’re definitely going to get top dollar for our rentals, so I will often tell them that their child’s best bet, their friend’s best bet, etc. is to go elsewhere.

It explain that it might be best for them to rent from a private landlord who is not going to be able to get anywhere near the amount of rent that we’re charging; however much we can charge for that rental, we’re going to get it. In many cases, that’s hundreds or even a thousand dollars more than what a private landlord could charge, depending on the rental.

Lastly, I also tell them that we have staff that handle our applications; I am not involved at all. You might be using a standard criminal background check, but I would perhaps tell them that you use a third-party criminal credit background check that’s fairly extensive. Due to the Fair Housing laws, we can’t really get involved in that, whatever the final decision may be. After explaining how it all works, I would just try to step away and protect yourself as much as possible.

I truly wish I had better advice for you, but unfortunately I’ve never been super successful at telling friends I can’t help them out. No matter how I phrase it, it always seems to be a disappointment. So, I wish I had a better answer for you because if I did, that would help me out a lot too!

Best of luck!


Joe White

Joe White is a Philadelphia Property Manager and Real Estate Broker. He is the owner of Grow Property Management and has been involved in the management, sales and purchases of Philadelphia area rental investment properties since 2008. He is an author and works as a real estate investment consultant and construction manager.

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