Ah, family tenants who "play games." Just the kind of tenant I avoid at all costs. But regardless...here we are.

Here's what you need to write to her.

Dear Sis, when I bought this house, I did it as a favor for you as a temporary form of assistance. It is still my house that I own and it will stay that way. If you wish to rent it from me as a tenant, I am agreeable to that, but we will do this deal in a business-like manner so that all needs and expectations are spelled out and there are no questions. I love you and want the best for you, and this is the way we are going to proceed. Otherwise, consider this your 30 days notice to vacate the premises.

Tex, did we here all fail you by neglecting to mention "never rent to family, friends or co-workers," or did we say that and you chose to do this anyway?

I think you are going to regret the day you chose to do this. She is going to feel entitled (already does, right?) and will keep playing game with you, even once the lease is signed.

The rest of the family will take her side, because you are a rich land lord and she is "struggling" and deserves "help" (read 'charity'). They will not help her, but they will criticize you in spite of your efforts. When you ask for rent that is 4 weeks late, you will not be "understanding her situation." When you repair the HVAC instead of upgrading it to new units, you will be "stingy". Thanksgiving and Christmas time will be filled with subtle and not-so-subtle remarks that somehow, you are not doing enough for her....even as those who make the snide remarks are doing nothing. And then one day after the house is in bad shape due to her lack of housekeeping and/or the weird domestic living situation she allows and there's 2-3 months of unpaid rent and she's calling the city to report you for being a slum lord, you'll have no choice but to evict her. At that point, half the family will blame you for every problem she caused and will never speak to you again.

If it were me, I'd back pedal and get out of this deal immediately to at least limit the damages. If you stay in the game, be sure the half of the family who never speaks to you again is the half you don't like. (wink)

Well said Sid!

I looked back at the OP in April. Yep, we did our duty and gave fair warning. My advice hasn't changed since then. Sounds like everything we warned about is beginning to happen with the entitlement issues.

Hate to say we told you so... has she paid you any rent, or just moved in. As with any tenant, it is difficult to get them to sign a lease AFTER they have possession of the place. This is why we have a lease signing, money transfer (rent and deposit), utilities in tenant name, THEN we turn over the keys.

I would use the standard lease that you have, put any specifics for this unit in it and try to get her to sign and pay. However, don't expect it to happen, and get ready to evict.

So you let someone move in without a lease, let someone move in without a deposit, and rented to a family member. You're just learning all the hard lessons at once aren't you?

If your family is enabling your sister, then consider this house lost if you expect to have any form of family acceptance ever again. Sell it to another investor or find a way for her to buy it. Anything you do that goes against your sister's sense of entitlement will alienate you for all future family gatherings.

Reviewing your last post from April, you have "a nice little portfolio" and the PITI on this house is $415 a month on a ten year note, so this is about a $50,000 house?

Just give it to her. Gift it outright. If you love your sister as you say you do, don't set yourself up for continuous battles with her. Make it clear (and actually do it this time in writing) that this is the end of your gift, there will be no ongoing support for utilities, taxes, etc.

Don't wrap yourself in knots when, not if, when she messes up and loses the house. Do not bail her out again. Consider it your gift to humanity.

Just as a refresher:

--FIRST rule of LLing is ALDO's rule "the owner is always in charge, the tenant is not in charge"

--SECOND rule of LLing "Never rent to relatives or friends"

My first rule of Landlording is: " No good deed goes unpunished."

If she OWNS the house, pass on the tax and insurance bills.

You are likely to end up looking mean to the rest of the family because of your good deed. The Lease needed to be signed before movein and I would certainly make it month to month now.

Tex

There is always HOPE. As Brad says “Gotta know YOUR relative”.

Listen to this board unless you want to sing “I did it my way”.

My story. Brother needed a place to live. I ask him where in the state he wanted. Take a map and make me a circle indicating a geographic area. He did and in a week I located 3 properties. I called him up (he lived about 200 miles from me) and told him that tomorrow we are going to go look at properties – BE READY. They were about 160 miles from me.

We went and looked, I let him select one of them and within a week it was bought. I bought it in my name and to this day it is in my name (~ 5 years later). I paid the down payment on the loan and he has made all other payments.

It’s now paid for and he has a place to live free of charge for the rest of his born put together except for normal monthly cost (utilities, ins. Taxes etc.).

The thing about our family (me, brother, sister) is we can lay down $ 5, 50, 500 on anyone’s kitchen table and 3 weeks later it is still laying there.

So there is hope for family but I don’t think so in this case.

Keep your chin up.

I used to attend a support group for parents of special needs kids. One of the women attending was a woman who had a Habitat for Humanity house. I learned that Habitat for Humanity does not actually give the house to the recipient families right away. This prevents recipient families from immediately selling the houses for a profit. The family has to maintain the house for 10 years until the deed is transferred.

This came to light when her special needs teen was destroying the house due to his anger and punching holes in the wall. She was in danger of losing her house back to Habitat. (She was judgemental of me for being concerned that my son was damaging my house -- she thought we should live with holes in the walls because that was the consequence....we were too materialistic .... I inwardly smiled when Habitat inspected and she was in danger of losing her housing.)

In Tex's situation I would be tempted to donate the house to the sister's CHURCH. Let Tex get the tax write off and

Tex,

I too went back and looked at the responses on your original post. Some of us warned you. But a bunch of emotional responses dominated the thread so I feel that as a group we misled you. One or two family members who live up to their lease must not overshadow the HUNDREDS who abuse their family member LL.

Like people who lose money in the stock market LLs who lose money renting to family or friends seldom brag about it.

Rules are in place to protect us in the "what if's". Sure some family members do fine but now you are in for a beating.

Put that stuff about adding a roommate in writing with her signature.

Taxes: My CPA says you can be taxed on the fair market rent if you give a family member a discount.

Break Even: you need to add $2-400 per month to include large item, long term maint.

Please let us know what develops so we can all learn in this oh so common problem.

Get on this. It will get worse every day - as you are seeing.

Tex,

I too went back and looked at the responses on your original post. Some of us warned you. But a bunch of emotional responses dominated the thread so I feel that as a group we misled you. One or two family members who live up to their lease must not overshadow the HUNDREDS who abuse their family member LL.

Like people who lose money in the stock market LLs who lose money renting to family or friends seldom brag about it.

Rules are in place to protect us in the "what if's". Sure some family members do fine but now you are in for a beating.

Put that stuff about adding a roommate in writing with her signature.

Taxes: My CPA says you can be taxed on the fair market rent if you give a family member a discount.

Break Even: you need to add $2-400 per month to include large item, long term maint.

Please let us know what develops so we can all learn in this oh so common problem.

Get on this. It will get worse every day - as you are seeing.