In a nutshell, when your child is with a family member, you can usually be sure that your baby is getting lots of love and attention from someone who will play an enduring role in her life. Unfortunately, some of the strengths of the arrangement can also be weaknesses. Having a close personal relationship with your child's caregiver can make it difficult for you to establish an employer-employee relationship. In addition to undermining your authority, this can confuse your child and end up damaging the relationship with your relative. To avoid this, be sure to set up clear lines of communication and establish ground rules from the start.
Tension can also arise over payment.
Admittedly this may be a worst-case scenario, but in lots of situations, it's not all that far from the truth. And whether you pay your relative or not, you may end up feeling deeply indebted to her, which can be awkward and may make you less likely to stand up for your views on raising children. She may have more than enough stamina to care for a baby, but a running, jumping, exploring toddler may utterly exhaust her. Adding another child to your family may also prove to be too much for some relatives. You may want to do this anyway as your child enters the toddler and pre-school years.