I talk frequently with cottage owners who are considering renting and are understandably a little apprehensive about the prospect of strangers in their property. A common decision is to start out by renting to friends and relatives because it feels more comfortable when they know their rental guests, but there's evidence to show this is not the best choice to make.
Before you give up a rental week to a work colleague or your cousin and his family, think about this:
If you are accepting money from anyone, make sure you have adequate insurance cover for the period in which you are renting. It doesn't matter who the renters are – once money has changed hands you are liable for any insurance issues that may arise.
You might feel it is unnecessary to have people you know sign any documents relating to the rental, but without a rental agreement and a document detailing the Terms and Conditions of Rental, you have no legal recourse should anything unexpected occur.
You will always need to check the condition of the property between rentals, even if you feel confident your guests will leave it in the same condition in which it was found. We experienced this recently with one of our managed properties where the owner's family were staying prior to paying guests arriving. The list of complaints from the new renters was lengthy – bathrooms not cleaned; garbage left around the property; perishable food left in all the kitchen cupboards etc. It is tough to approach your own family or friends afterwards with this type of issue and can create a lot of resentment.
Although it's likely that most of your friends and relatives will respect not only the property, but also the environment, a situation may arise where you have to take action to resolve a problem. Excessive noise, barking dogs, and overloaded septic tanks are a few that come to mind. This could cause serious damage to a relationship of any kind, so keep that in mind too.
Personally, I would not offer my cottage for rental to anyone I know. We've had friends stay there free of charge, and that worked fine, but even then, I had a standard changeover done, as if it had been rented normally. It is just too easy for relationships to be compromised and I value them too highly.