I am an experienced leader, and personal relatiuonships are the single most important aspect of your leadership ststus. You can have a title, that does not make you a leader. Being the boss is a leadership position politicaly, that does not make you a leader. The best definition of how a leader is defined is this. If you look over your shoulder, and people are following you, then you are a leader. If they are not following you, then you are not a leader. A boss is supposed to be a leader. Lead by example.
Be a real friend, do not take advantage, or hold back respect, appreciation, credit, or rewards. Expect the same. If they expect special considerationsd from the boss, they are not your friend, do not keep this position to yourself. You can be friends with your direct reports, I have had mines kids go camping with my family, over for dinner, etc. My direct reports have come to me with personal problems like pending divorce, death of spouse, kids, parents, etc. There is nothing wrong with this.
That does not say that some will not try to take advantage of your relationship, if you allow that to happen, that is the issue, not the friendship. Have a backbone and tell them if they expect that type of consideration, then you will not consider them your friend. In fact , tell them that expectation from them lowers your perception of them as a friend, and as a member of your team. This type of behaviour will effect both your personal, and business relationship in a negative fashion. Have enough personal integrity to not choose favorites based on anything but performance, and you should be fine. That will be respected by any real friend, and any valuable direct report.
You do not always get what you pay for, but you never get what you do not pay for.