Would you rent to your family?

Discussion in 'Property Management' started by Angel, 20th Aug, 2017.

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  1. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Dealing with family is difficult, in my experience they pay more attention to what a third party tells than what you do. I've seen this time and time again. I have done business with family members and will do so again, but it is usually a often process. I'll give family members money with a general expectation that they pay it back, but if they don't I'll be fully prepared to write it off.

    There's no way I'd let a family member or even a friend move into one of my IPs. It's all great until something goes a little wrong. It can cause a relationship breakdown. If one of my siblings needed a house to rent, I'd give them references and even subsidise their rent for them to help.

    My IPs are for my long term financial security, I don't want to be put in a position where I may have to choose between that and a family relationship.
     
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  2. Angel

    Angel Well-Known Member

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    I saw the boys this morning and asked No 1 Son, the Aspie, how disappointed he would be if he doesn't get to rent it. He was only half awake so I continued with my speech that they are better off renting a three bedroom house without having to deal with a fourth person who is not committed to the deal. These original three boys have planned on living together since they were in primary school and Aspies don't do Change. His Aspie Best Friend is even less able to cope with change (and a stranger in his home) than my son is.

    Dan looked very disappointed but I reminded him that it will be his home in the future (violins please).

    Tom, I don't know if my PM is still on PC, they used to be earlier in the year.
     
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  3. Alisha Banks

    Alisha Banks New Member

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    How much ‘below’ market value can you charge before there are tax implications?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    $1
     
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  5. Lizzie

    Lizzie Well-Known Member

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    Seriously - do not EVER mix family and money/business ... the only two times we have been talked into trying it, we got stung - badly - both financially and relationship-wise.

    The first one was ex-hubby and I rented out house, while we travelled, to his brothers and a friend ... one of the brothers and a friend moved out. The remaining brother decided he only had to pay 1/3rd of the rent. We let it go, but financially was painful.

    Second was lending to hubby's daughter to buy the car she "had to have" - she stopped repayments when her excessive lifestyle caught up with her, sold the car to pay other debts and only repaid the outstanding after a terse argument ... relationship has been testy ever since.
     
    Last edited: 9th May, 2018
  6. Alisha Banks

    Alisha Banks New Member

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    Yes but this is my mum. She has lived in housing commission for over 20 years. She’s done putting up with bad areas and horrible neighbors and now finally I can help her. We are super close and I know this won’t cause a rift.
     
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  7. Alisha Banks

    Alisha Banks New Member

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    Really? Oh :(
     
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  8. Tony3008

    Tony3008 Well-Known Member

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    Nearly always goes bad. Two family cases back in the UK caused huge rifts, in each case the relative taking advantage of my dad's willingness to help them over a difficult time. One of my IPs here is let to a friend (got bounced into it) and she has a very casual attitude to paying. I ended up putting it into professional management thinking this would sort things out but no. Never pays late enough to take further action, but late enough to cause a lot of inconvenience. And this after the agent pointing out that she is trashing her own credit record. "Would you mind having a word with the agent?" she asks me. "Yes, I would mind, just get your act together and pay on time."
     
  9. Ross Forrester

    Ross Forrester Well-Known Member

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    Walmart - family business.

    Qandt family owns BMW.

    Porsche family owns Volkswagon.

    Ford family owns 40% of Ford.

    Cargill family owns Cargill.

    The Mitsuii family started in 1622. They own Toshiba.

    The Lee Family owns Samsung.

    A properly run family is the best and most secure governance structure for very long term success. It's why we do what we do. Admittedly you need good advisors who know what to do beyond tactical document preparation. We have helped Perth families that started in 1860 and they are now 5 generations strong.

    There are ways of keeping dynasties together and even a one generation start-up family has ways they can start ensuring the conflicts are reduced. These great families do not happen by accident.

    Family Business Australia - fambiz.org.au are a great resource with real life example of families who owns business and they will share their strategies freely. And they have great accredited family business advisors who understand their technical part and the family element.
     
    Last edited: 9th May, 2018
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  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    But you just need to consider the consequences which could be insignificant
     
  11. geoffw

    geoffw Moderator Staff Member

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    On the other hand there's the Reinhardt family.

    There is an old saying that the first generation builds the business, the second grows it and the third loses it.
     
  12. hobartchic

    hobartchic Well-Known Member

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    It seems to me that your children are being provided with a roof over their heads at the moment so they do not have to move out at a moment's notice. Sure, it's not a separate property but they have the tools to get there in the future (from the sound of things).

    Providing knowledge like how to cook frugal meals is something that would go towards that goal and other budgeting advice/your example, you can offer.
     
  13. Ross Forrester

    Ross Forrester Well-Known Member

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    And that is a tragedy. It does not have to be that way.
     
  14. Lizzie

    Lizzie Well-Known Member

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    Yes - but they are family businesses, with all the documentation, escape clauses and delagations strictly in place.

    We are talking about a form of lending/charity from one family member to another.

    I do totally get the leg-up thing ... but now eyes are wide open and anything from now on will be a gift, with no expectation of it being returned. Not a loan or lending (renting to family is lending them your home).

    Personally, I'd have them rent elsewhere but contribute towards it - which we have done with hubby's older kids in the past