I'm yet to hear a good 'renting to friends and family' story from someone who isn't a professional property manager, and my story below is the closest I’ve ever heard to a good outcome. Perhaps because there is nothing to say about good news stories, but more likely because 'happy ever after' stories don't happen often with the ‘too close to home’ group of people family members and friends are. I have an encyclopaedia's worth of stories of bad situations. Like the time the family members had the place for cheap rent but left it a mess, never did the lawns, let weeds take over the gardens, didn’t fix things they said they would, didn’t report broken things, didn’t help the rest of the family return the property to lettable condition after the tenancy ended, caused a long vacancy due to their lack of care, guilted the landlord into allowing a pet (or just got one without permission), sublet the property for a profit, and on and on. Sometimes this all happens to one person, but I have heard variations of this story again, and again, and again from many different people.
If you think this won’t happen to you, ask yourself if you'd not want to put up the rent because you know their personal circumstances and what will the family think of you if you do an increase at a bad time - and let’s face it, there is never a good time for a price increase on anything. Maybe you think 'this will just be a temporary thing', and you won’t need to increase the rent during their short tenancy. Well, I don’t know anyone who willingly moves on from a good wicket. If the rent is low, the place is comfortable, they will stay. And stay. And stay. Until your rent moves, they won’t.
Visiting your tenant/friend/family member socially would be a no-no, in case you see something that you'd rather not see in your rental, but wouldn't care about so much, or even notice, if it wasn't your property it was happening in. Don’t assume that just because you are related you both keep house to the same standards - so far no gene has been identified for cleanliness. It’s likely you’ll be more offended by anything they do or don’t do because of your relationship and expectation that they should treat you fair because you are kin. Visiting socially also makes it tricky to define as to whether your visit is a social one, or actually an inspection or maintenance visit. If the relationship goes south, do you think your tenant/friend/family member won’t be resentful of your lack of appropriate notice for those landlord visits? This is a serious offence, so don’t get it wrong.
If you can identify with our characteristics, and are not shocked by our actions and choices, then maybe, just maybe, this could work for you too.