How much rent to charge?

[Dallas69]

Hi guys
I now have my Mom's house and may rent to my nephew.
What is a good way to figure rent?
I don't like the idea of being landlord but for now I may have to.
I know some here know about this.
Thanks in advance.
House was built in 1973
2000 sq ft
3br-2bath
2.5 acres

 

[Rudy1999 250]

I get 1 % of the Value.

 

[Spector]

Who will be doing the lawn etc and who is paying the utilities?
Look at rentals online for your area. So many factors, neighborhood, location, condition of house.

 

[skyactiv]

Him being your nephew means he might take advantage of you and you'll easily give in due to being family.
One thing I'd put in the rental contract is him not being able to store vehicles, trailers, RV's.. which can happen with 2.5 acre's.

 

[charbaby]

Look up what similar sized whole homes are going for in your area(if any) or similar areas where homes are being rented. Also, consider whether your nephew is going to maintain the yard/lawn(and with what equipment) or is the lawn going to be maintained by YOU or a lawn car service at whose expense? 2.5 acres is a lot to maintain!

Are the utilities included or with said nephew paying for all expenses including trash pick up?

And what about homeowners insurance?

Furnished or unfurnished?

What about other home maintenance/repairs?

Lots to think about.

 

[04SE]

We charge by the square foot based on amenities and location. Duplexes and small houses will go for upwards of $1 per square around here. I won't rent something out for less than $0.80 per square.

 

[alarmguy]

Originally Posted By: Dallas69
Hi guys
I now have my Mom's house and may rent to my nephew.
What is a good way to figure rent?
I don't like the idea of being landlord but for now I may have to.
I know some here know about this.
Thanks in advance.
House was built in 1973
2000 sq ft
3br-2bath
2.5 acres


There has to be some places where you live with comparable rents or contact a real estate agent... once you have a price, present it to your nephew.
Do NOT give a nephew a break in the rent anymore then you would anyone else unless you have no problem supporting an adult outside your family with your own income.
Keep in mind, its a two way street, whatever deal you work out has to benefit both parties.

 

[charbaby]

Another question to ask yourself. Don't answer in this post but only answer to yourself.

Is your nephew a responsible adult with a steady income or someone who goes from job to job or is often without a job thinking that the whole world owes him something?

Is nephew the type of person that has defaulted on other loans and/or has poor credit?
If so, he'll be worst with you and expecting you to be more understanding while he's not! These situations are always one sided. With family(IME) it's all about them!

 

[aquariuscsm]

Look to see how much comparable properties in the area are renting for.

 

[JHZR2]

Originally Posted By: Spector
Who will be doing the lawn etc and who is paying the utilities?
Look at rentals online for your area. So many factors, neighborhood, location, condition of house.



+1. I'd be a bit concerned about family looking for a deal, or else being a problem if you must evict.

 

[SatinSilver]

Originally Posted By: Dallas69
I now have my Mom's house and may rent to my nephew.


Yikes, I had a co-worker that had to kick her neice out of a rental home. Not only did it sour the relationship with her but other relatives also including her brother, nephew, etc.... So this type of deal can divide the family no matter how correct you may be. You will be at fault in their eyes of not being more compassionate. No good deed........

Talk to some realtors.

 

[beanoil]

No breaks for family.
Compare your house to others local on Zillow or HomeFinder.
Won't mean a thing in Texas, but I have a 3BR, 2Bath, 1000 sq. foot, 2 car detached garage for 900 a month here in central Il.
Renter puts electric and gas in his name, I pay trash and sewer.
Always surprised at the number of folks that think they cannot buy a home, but will buy one for me.

 

[CT Rob]

business and family rarely go well together.

 

[CT8]

You can only get what the market will bear.

 

[raytseng]

to find market price, use online resources like apartments.com craigslist or related to find what the comparable offerings would be and adjust to estimate your offer. If you were a renter what would be the next best option.

The break for family depends on how you are viewing the discount. How close your nephew is. Is this like an estranged or casual nephew. Or are you close as if its your own child.
Consider what do you think the discount for? How do you view it? The answers maybe subtle

Is it really a favor or gift from you for them?
Or is it for you to feel better and not guilty about charging family?
Is it mutually beneficial and representing the benefits of this renter over a stranger?
The first 2 maybe problematic, the 3rd one is a better answer
To help you answer

It also depends what you're trying to acheive with the rental income. Do you really need that income? is it just a token amount and you also have $10 million in other assets and this rental income is relatively meaningless to you?


You can also adjust if you feel your nephew is a better choice than a stranger that pays full price. Are they kids in their 20s with friends like a frathouse? or grown adults?
Is the discount because you know the nephew and he wont mess up the place or break your rules or miss the rent and that is worth something to you?

You can also consider and how much you think they can afford. If they are making $500,000 a year in combined income they dont need a discount compared to if they are scraping by.

Also is the term a long term multiyear situation or short term? Is that good or bad for you (finding a steady tenant is worth something)

if you are asking for anything close full market rate as a formal arrangement you should also expect to be taking on full landlord duties.

Do you think the nephew will be more flexible with proerty faults than a stranger that is paying in a formal contract. Is that worth a discount? If the hot water breaks are they ok for a few days vs a real tenant?

If you're arranging a family rate or discount; this is an opportunity you can bring up that the discount is in exchange for service. For example, You can formalize the nephew has to be the property manager and manage maintenance or issues that come up (this does not mean pay for it; just the management aspect). Do they have experience in home ownership or are smart enough so they can take over this duty in exchange? Are the management duties something you dont want to do and think the nephew can do?

Ultimately it is up to you.

I would say if you are doing a discount and the discount is a pure gift it should be significant and meaningful enough to get over the family aspect and that both sides recognize that discount.

Finally as the family aspect consider:If you go to Thanksgiving dinner and your parents ask for $10 to cover the meal how does thst make you feel. Even though logically the meal is worth $20 so a great discount and you can totally afford $10 yhis has completely shifted the dynamic.

 

[JohnnyJohnson]

One of the biggest problems in rentals is renting to a relative or a friend of a friend. Get an agency to check your renter out no matter who it is.They pay agency for the check out. Rent history, wants and warrants and a good credit check. If the don't pass all with flying colors don't rent to them. First and last and damage = to one month. The rent you will actually have to shop a little on comparable homes. I rented for over 20 years. Do yourself a few favors one rent at a near competitive rate. Don't lease, rent month by month.

 

[4wd]

Originally Posted By: Dallas69
Hi guys
I now have my Mom's house and may rent to my nephew.
What is a good way to figure rent?
I don't like the idea of being landlord but for now I may have to.
I know some here know about this.
Thanks in advance.
House was built in 1973
2000 sq ft
3br-2bath
2.5 acres


When I was a young man on hourly wages … got a family break on rental … the deal was I had to work on the place and she would buy materials/tools as requested … I left the place much better than when I got there after enjoying a nicer setup than an apartment alternative … AND learned lots about caring for a property and related equipment …

Wind forward to now … have the same thing going on my condo … and it’s looking better every time I have a visit …

 

[Dallas69]

This is a difficult situation .
My Mom died 2 yrs ago.
My brother moved in to care for her 5 yrs ago.His son came also.My brother was in declining health and his son took care of him.
My brother died Monday.
My nephew's Mom died when he was 8.
My brother never remarried so it was always just the 2 of them.
I will give my nephew first shot at the house but I feel so sorry for him.
I just want to help him get started on his own.