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How to Successfully Navigate Renting to a Friend

By Riley Gibson October 31, 2023 Lifestyle

Have extra space in your home that can be used to create a rental income stream and a friend in need of a place to live? Before long, the conversation inevitably turns to a discussion about becoming housemates.

It may sound like a perfect idea to live with someone you already know – and for some it can be – but being a landlord to a friend who is your tenant could also have long-term consequences on your relationship.

On the plus side, renting to a friend usually means they will be more apt to be respectful to your home and property. Also, since there’s likely a mutual respect there, there’s less of a chance that they’ll be late making rent payments.

On the other hand, if there’s discord between the two of you because of the close quarters or housemate disagreements, it could damage your friendship. There’s also the possibility of a friend taking advantage of your relationship and being consistently late with rent payments, using your items without asking or other transgressions.

Here are some steps you can take to ensure your friendship endures when renting to a friend.

Agree on Common Ground Rules

It could be your friend from childhood, but if you’ve never lived together, you don’t necessarily know how to live together in harmony. Often times, friends assume their living habits are the same, but one may be less tidy than the other, more likely to have their significant other sleep over, watch TV into the early hours or take hour-long showers.

Also, many people are working at home these days and, if that’s the case for both of you, it’s imperative to carve out workspace and work hours.

It’s best to meet up front and determine things like bathroom time, buying and sharing food, stocking toilet paper and other household staples, who parks where, how to use common closet space, help with pets, lawn upkeep and entertaining.

While it’s ideal to capture this in writing, a formal contract could feel a bit overboard for most friends. One good way to go about it is to email back and forth about your preferences and find common ground – this way it’s captured in print but doesn’t come off as if you don’t trust them.

It can also be effective to set up a shared calendar that captures everything you’ve agreed upon with regards to travel schedules, guests, pet sitting, etc.

Work Out a Fair Rental Amount

Just because it’s a friend doesn’t mean you should be losing or not making money on the deal. Chances are that you’ll end up feeling resentful.

Determine what a fair rental agreement looks like based on what you’re paying and how much your friend is saving. You may want to give them a “family and friends discount” – particularly because the long-term rental stream may be more steady since you’re knowingly compatible and comfortable together, although you shouldn’t have to make a monetary sacrifice either. Also, be sure to collect a security deposit so you’re not out of luck if any property gets ruined.

Make the Tough Decision on Running a Credit Check

You may know your friend’s favorite musical group or meal at the local restaurant, but there’s a high chance you don’t know the ins and outs of their financial standing. Here’s where you have to make a tough decision about whether or not to dig deeper into their finances to ensure they’re able to cover their monthly payments and bills.

Do you run a credit check, or does that put you in ultra-awkward territory since friends and finances don’t often mix? It may depend on the nature of your friendship. For some, it’s not an uncomfortable request to make, while for others it may be.

If you’re in the latter group, but want the assurance, you could casually ask if they’re in a good financial standing and see what kind of information they offer up. It could also be that it’s something your homeowner’s insurance or other third-party requires, which could greatly ease your comfort level when making the request.

Sign a Lease

Just as you would with any other property, make sure to enter into a lease. There are state-specific leases widely available for free online that you can download and customize. The lease is a good place to account for things such as rent increases and property damage, so those don’t become contentious points-of-discussion because the terms are understood.

Ask a lawyer or another third-party to do a final review, so you’re getting an objective set of eyes and minimizing the chances of disputes down the line.

Divide Bills Down the Middle

When it comes to utility, internet and cable bills, a good rule of thumb is to divide them down the middle. At the end of the day, if someone has a few more toilet flushes or leaves a couple of lightbulbs on in the afternoon, it’s not going to make a significant difference in the bill rates.

It can be a whole lot complicated and prickly to try to assess more of the charges to one person over another every time a bill comes. Even if just one of you is working from home regularly, consider the tradeoff that comes with that.

The housemate working outside of the home will have the peace of mind that packages won’t be sitting exposed on your porch all day, that your pet will likely be getting some human attention and that someone will be there to greet the handyman.

Make a Plan to Head Off Issues

Conflicts are bound to arise when you live with someone under the same roof, but more is at stake when it’s a friend. Bottling up any annoyances over time can eventually lead to explosive arguments and inflict long-term damage on your relationship.

It’s important to keep a constant, open flow of communication to avoid festering issues. Remember that shared calendar? Put in a designated check-in date and make it happen – grab coffee or a bottle of wine or cookies or whatever and meet up to chat things through.

Pay respect to your friendship by making a pact that you’ll bring up any issues, even if they seem small. When you do connect on things, keep a sense of humor and assume positive intent. This will keep you from getting needlessly too deep or frustrating one another.

And don’t forget to look at yourself in the mirror too. Can you think of anything that you could possibly be doing that’s annoying? Chances are that you’re not the perfect, ideal housemate, so make sure to acknowledge your part in any homesharing challenges too.

Taking on a housemate – even a friend – shouldn’t be taken lightly, since this is feasibly someone you’re spending more time with than a significant other or family member. If you run into bumps in the road while negotiating terms of your rent or living arrangement, it just may not be the right time or the right friend.

If it’s something that doesn’t feel comfortable, don’t take that chance and let them know from the get-go that this is a possibility. However, there can be great joy, companionship and memories made when you live with friends, so don’t rule it out when you have a room sitting unoccupied.

Let’s Have a Conversation:

Do you have extra space in your home? Have you considered taking in a friend as a housemate? What might be stopping you? Have you had a home-sharing experience with friends or non-friends? How did it go/how is it going? Let’s hear from you!

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The Author

Riley Gibson is president of Silvernest, an online homesharing service that pairs boomers, retirees, empty nesters and others with compatible housemates. Riley is passionate about creating housing solutions for the future that enhance financial wellness and facilitate social connections for those over 50. Visit him at and or by visiting his LinkedIn profile below.

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