Dear Dave: I own a duplex that has an opening for a tenant, and an old college buddy wants to rent the apartment. He always has been a good friend, but I’m a little worried about the possible effects on our friendship if business is brought into the picture. Do you have any advice? — Justin
Dear Justin: You can make this work, but you’ll both need to be careful. It’s going to take a lot of honesty and maturity from you both.
Doing business with friends always comes with the risk of running into a situation that can damage the relationship. Am I saying never do business with friends? Of course not. I do a lot of business with friends. I just make sure all the specific requirements and expectations of the business relationship are laid out in clear detail, in writing and fully understood by both parties before a deal is struck.
Sometimes, friends have unrealistic expectations when it comes to doing business together. The friend who is renting might think the friend who is the landlord will give him a pass if the rent is late, and on a dozen other things. The friend who is the landlord might think the renter will be a perfect tenant because they’re friends and find out the hard way his buddy is a slob who doesn’t respect and take care of the property. All these things should be ironed out ahead of time and before the agreement is signed.
You might want to make sure, too, he understands the need to come talk to you if a situation arises in which he might be late with a payment or not be able to pay the rent one month. Most issues such as this can be worked out, but he needs to understand — and it’s your job to tell him ahead of time, in a kind-but-firm manner — you’re not running a charity.
Just be friendly, straightforward and businesslike. If you have to enforce the rules, do it consistently and with fairness. Likewise, if a situation pops up where a little grace and understanding are appropriate, provide those as well. — Dave