Renting From a Relative (The Right Way)

When Rachel Lewis moved in with her mother-in-law in Oakland, Calif., you can bet it wasn't her idea. "It was my mother-in-law's [idea]," she says. "I did not like it. But the apartment next to ours had been condemned because of mold," she explains, "and our daughter kept getting sick, so we left."

Living with family can be a mixed blessing. On the one hand, generally speaking, renting from family can seem like a very attractive option when you find yourself in a bind and in need of a place to live. On the other hand, the familiarity that got you to leave home in the first place is going to apply the minute things get sticky -- and since renting tends to involve money, business transactions and stress, expect that they will.

"It can end bad," warns Lewis.

But it doesn't have to. If you are renting from, or thinking about renting from a family member, follow these steps to avoid going from family home to family feud:
1. Be Responsible

For Anna Applebaum renting from her father in Columbus, Ohio, for almost a year has been going great. "Probably because I have never been late for a [rent] payment," she explains. "I actually make it a point to pay early and I haven't trashed the place."

The truth is, it can be easy, if given the right company to behave like the irresponsible self of your childhood. However, any landlord/tenant relationship requires that you in fact behave like you are a grown-up. If you believe yourself to be acting as your best self but feel your landlord has some "maturity" issues, you might want to step up your search for a place of your own.

2. Set Boundaries

Before you move in, make sure you are clear with your family member about your expectations for the boundaries of your home. If, for example, you plan to host a series of summer barbeques in the backyard of your sister's duplex, let her know that you'd like your rental agreement to reflect that the backyard is shared space. This way, if she had intended that you pretty much stick to the basement, those details are hashed out in advance. Similarly, if you are only renting a bedroom, make sure you are both clear about when you are free to use the common spaces – and how often.

Even though before you moved in everyone was 100 percent lovey-dovey, once you are under the roof, attitudes shift quickly. While it might be true that your family member needs the extra income your rent provides, they might not have expected what it will actually mean when you are microwaving popcorn at midnight and waking the house. Set rules in advance and then stick to them.

3. Set a Fair Rent

No matter how casually you might take your relationship with your landlord/relative, when it comes to money, "casual" is a really bad idea. Discuss how much rent you will be paying in advance and make sure both parties understand the way in which this number was reached.

This can be handled in a number of ways: You might use Craigslist to find similar rental offerings and then agree to a 5 or 10 percent "family discount." Or, if you plan to help out by working on improvements for the unit, make sure you know who is paying for materials and how all monetary transactions will be handled. The fewer the opportunities for conflict, the better.

4. Don't Give or Take a Pity Rental

Family is great because they can help you out when the going gets tough. However, sometimes it's all too easy to take advantage of a family member. Therefore, if you find yourself in dire straights try to find any other way out of your dilemma before accepting what will certainly prove a very humbling experience.

If you do end up moving into a relative's place and are hoping not to have to pay, or expecting to pay well under market value, make sure you both agree in advance on how long that arrangement can feasibly last. Then, while you are there, be certain to live graciously and with as much deference to their kind gesture as possible.

5. Know the Rules

In some housing markets, renting to a relative can net a person some helpful tax deductions. Similarly there are legal issues involved when taking on a tenant. As a tenant and family-member-in-good-standing, it would certainly demonstrate your goodwill if you looked into the laws in your area. By letting your relative know what they have to do, you will help them to maximize their experience with you under their roof. And they will truly appreciate you for it.

Renting from family can be a challenge, but that doesn't mean, with a careful step and a lot of respect things can't work out in your favor. You just have to know what to do, and of course what not to do.

"Don't take advantage," says Anna Applebaum. "You are stuck with your family and you don't need the bad rap or grudges."

Joselin Linder is the author of The Good Girl's Guide to Living in Sin and Game-Based Marketing.

Want to know how to deal with other rental issues? Here are some AOL Real Estateguides that can help:
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