<prompt> Human: My sister and I have a great relationship. Ive never been a landlord, and by keeping the house in the family, Im hoping to avoid learning how to be a landlord: Im happy to rent to them for below market rate; just enough to cover the mortgage, taxes, and a homeowners insurance. Instead of a formal rental contract I was just going to write our mutual expectations down for clarity. Im am confident in their ability to make rent.Is this a reasonable way to structure things within a family, or is this unwise? I know an alternative would be to structure things as formally as strangers would, but Im hoping to avoid that. Edit: Thanks for the thoughtful replies! Id add that the idea of keeping things informal comes from me, mostly to hopefully just reduce complexity. My sister wouldnt be opposed to a full agreement or anything like that.Edit: Spoke with insurance company, will have to switch from homeowners to landlord policy, but the price is comparable. Also tenants will need renters policy, which is super cheap. Assistant: Instead of a formal rental contract I was just going to write our mutual expectations down for clarityDO NOT DO THIS. Have a lease. You never know when something could go wrong no matter how great your relationship currently is. Im hoping to add their names to the homeowners insurance policy, if that is possible. Then hopefully they wont need renters insurance.I dont know if this is possible, or what it would cost. Renters insurance is dirt cheap, I pay like 6month for mine. If you can add them to your homeowners, then compare what the increase in your premium would be to what their renters insurance would be, and go with the cheaper one. I hoping to avoid paying for extra landlord insurance on top of my homeowners policy and umbrella policy.This probably depends on the terms of your current insurance policies and possibly statelocal law. Im not concerned about their ability to make rentI mean, you should be, otherwise youre not renting so much as letting them live in your house.Human: Thanks! Sounds like I need to get a better handle on the insurance side of things. I also updated my phrasing to say I am confident in their ability to make rent, not that Im unconcerned about it.Assistant: This isnt about their ability to make rent, but rather about preserving relationships. Theres a reason the saying dont loan money to friends and family exists. If you are willing to forego a contract then you also need to accept the possibility that they wont pay. Maybe one of them gets laid off, maybe they face a medical emergency, maybe, maybe, maybe... and the first thing most family members do is go well, hes family, hell understand if I dont pay him. Human: I think this is great advice, but Id like to think there are factors mitigating things going sour that I didnt adequately describe:- They genuinely are not looking to have me provide free housing, and dontwont expect that from me.- If they cant make rent, I will be able to easily sell the house rather than having to cover the mortgage.- If a medical emergency or disaster happened, my parents would step in and help them out for a period of time.That being said, the contract is a simple way to address the many concerns folks have pointed out, even if I wont and wouldnt use it for enforcement purposes.Assistant: Not downplaying you or your family, but the world is littered with people who thought that would never happen to me. Human: While I completely agree, I guess Im hesitant to conclude that I cant know someone well enough to treat them differently from how Id treat a stranger in terms of mutual understanding. Im open to the possibility of that being naive though.  <response>: I dont see how a basic contract to protect you and your assets is somehow demeaning to your family. 