Oh, Andrew. (shaking head)
My last experience was the exact reason I just sold our last rental house. Three…now gone and headaches, now gone!
You must do a formal lease and make sure you know the rental laws in your area. (Is your state more pro-landlord or pro-tenant…some states make it very easy for the tenant to take over property – extreme cases, of course.) Really understand those laws, or have an attorney help you with the lease. Like late fees, most have limits on that fee – know little things like that, it’s very important.
Do a walk-through, with a camera in-hand, take pictures of each room, as you both view the location…and yard, if there is one. Have him sign a document and list any issues, make sure it is dated!
Be prepared for repairs! Refrigerators, washers (if you provide them), dishwashers….toilets. Have the money, or a reserve line of credit, on hand, ready for those repairs. Agree, upfront, about tenant repairs. Will it be okay with you if your tenant repair something and you reimburse them or they deduct it from the rent. If so, make sure you agree that you must approval the repair price and materials being used. I had such an agreement, but my last tenant decided not to adhere to that policy…it became a huge mess.
Friends or not, when you are dealing with the house, you are Landlord Andrew, not friend Andrew. Just keep a clear line between the two. Oh, don’t make a rookie landlord mistake and spend the deposit money. I’ve known a lot of people that do just that…smart people, bad news!
There is a lot more, I could go on forever. Feel free to PM me, if you have any questions.
It’s not all bad, really. I just had three terrors, in a row.