Renting to Friends and Family
When you purchase a vacation home it can be quite amazing how many ‘friends’ contact you to congratulate you on the purchase; offer all sorts of advice and ideas on how to manage it, and suggest how much they would love to stay, in exchange for some work on the property. Of course, this advice and offers of help may be very welcome, but it is worthwhile being professional about renting the property from the start, and that includes how you let friends and family use it, particularly if you accept money in the exchange
Be clear on how the arrangement will work and what you expect. If a friend offers to do some work, come to an agreement on who will pay for the materials, the standard you expect, and how long it should take. If you are not happy with the outcome it is more difficult to complain and get it put right if there is a personal friendship connection that could get in the way.Use a rental agreement
. Clarify your expectations by getting your guests to agree to your Terms and Conditions in the same way paying clients would. If they query this, just explain it as a record you need to keep for insurance and administrative purposes.Describe your rental as a business.
Friends and family may not be familiar with the business of vacation rental so explain why it is important to maximize occupancy for income purposes. Let them know your goals for renting – maybe you are generating funds for renovations, or your ownership is dependent on the income to carry the mortgage. After all, these are people who you know and should hopefully understand your goals.Decide how to deal with issues.
When paying clients leave the property untidy or do some damage, you can usually assess the situation pragmatically with less emotion than you might experience when its family. Make sure they know how you want the place to be left; if you want them to clean it, or if you are going to be paying your property management company to clean up after them . What happens if they break something that will be costly to replace? Will they have insurance to cover these risks?Know your costs.
Even if you let family and friends use vacant periods that you haven’t been able to rent, there are costs involved from the moment your front door is opened. Heating and lighting; cleaning and maintenance; supplies; pool and hot tub costs, are all expenses that need to be covered. Be practical before you let anyone occupy the space for free –if they balk at contributing to these costs, perhaps it would be better to make a polite excuse and not let them use it at all.
The bottom line is that your vacation rental will be seen by some as a cheap accommodation option and unless you construct a F & F policy, you may end up out of pocket and out of friends!