Last month, Alison from Diamond-Cut Life shared a guest post about providing lodging to a housemate in exchange for work (instead of rent). Her story prompted a number of readers to ask about the mechanics and practicalities of actually renting an extra room to generate income. For example, Penny wrote with the following:
In August, my brother-in-law moved in with us. By December, he couldn’t find a job, so moved back out. While I had mixed emotions about his leaving, I did lament losing the potential income, because I thought my husband would never agree to renting a room to a stranger. Imagine my surprise when I mentioned the idea and he agreed to it.
I need some advice as to some things we should consider when finding a renter.
- What would be the best way to charge for rent? Flat monthly rate with utilities included? Weekly rate plus a third of the utilities? In our immediate area, rooms rent for $485-500 with utilities, or $125/week plus a portion of the utilities. I’m torn between the two modes.
- What sort of keywords should I put in the advertisement that would help find the right fit?
- How would food work? I don’t mind cooking for everyone; in fact, I love it, but I don’t want to pay for all of their board.
- Any other suggestions? Am I being too specific?
Our situation is a bit unusual, because we’re sort of urban homesteaders. We have gardens all over our small yard. We don’t use the dryer or the air conditioner. We use wood heat in the winter. Our family hunts and fishes. Will these things matter?
I’m curious about this, too. I don’t know anyone who has ever rented out a room, so I don’t know the process — and I don’t know if the income is worth the hassle. I do have friends, though, who have been on the other side, who have rented rooms from people in Penny’s position. During college, for example, my friend Andrew rented a room in a converted garage. But although the garage was attached to the house, but he didn’t interact much with the family he rented from.
If I were doing this, I’d check with my lawyer and accountant to be sure I was fulfilling my legal obligations, as well as protecting myself from possible problems.
I’d love to hear anecdotes from other readers. Have you ever rented out a spare room? Or have you ever been on the other side? Have you ever rented somebody else’s spare room? What did you learn from the experience? What advice would you give to somebody who was hoping to generate a little income by renting out space in their home, garage, or attic? And, finally, do you have any specific advice for Penny?
This article is about Ask the Readers, Entrepreneurship, House and Home
People used to pay for room and board – they paid for their food, and the landlady did the cooking. Whole families lived in boardinghouses in the nineteenth century.
Penny might get a good tenant if she advertises in alternative or student publications. Or maybe a roommate matching service could help? (This sounds like an area the roommate services need to get into!)
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1. if the person has a record or is a sex offender, it will be hard for him to leave – but on the other hand – he will be great to you because he does not want to get kicked out
2. establish where and when they are supposed to be… like if you work at your kitchen table, do you want some guy always next to you because he is too cheap to buy a wireless card so he can do his internet thing in his room?
example no 2: do you want a late night person being “active” in the house at midnight? cooking, cleaning, going in and out of rooms, talking on cell phone, etc
3. tell them to keep their sh!t turned down – not the place for loud music or loud tv
4. don’t count on them to do anything around the house – you do the cleaning, yard work, etc.
if you want them to do it, pay them by taking a few bucks off the rent – only if they are short on rent
5. tell the fat guys to wear a shirt
6. never do a lease – if they annoy you, ask them to find a place within 2 weeks – they will want a month – so ask them to try for 2 weeks and then “we will see how it goes” – you need to motivate them to go annoy some other household
7. don’t let people in who don’t understand “room for rent” lifestyle – if they want to act like they rent their own apt, let them go do that elsewhere and pay double
8. if they want to pay you weekly, or 2twice a month, let them do it – you still make the same amount of money
9. don’t let them do their friends laundry
10. dont bitch if they dont pick up – better to keep them out of common areas as much as possible – keep them in their rooms
11. charge them $ if you give them rides (for those who don’t own cars)
12. if they dont listen to you about your parking rules – get rid of them – they are @ssholes
13. be consistant on your rules – so think ahead of time
14. don’t count on them to know what it trash and what is reclycling – keep recycling close and trash outside the house so your trash can does not fill up
15. if they leave doors open – get rid of them – or you will be robbed
16. in summary – understand that you have power – you are letting them live basically for half price of renting an apt – always tell them “you might be happier getting your own apartment” whenever they are fuc#ing up
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Wow, I was surprised to see this article. We have a spare guest room/bathroom and I’ve thought of renting it out from time to time as well, but wasn’t sure where to start. I have the same questions as Penny, and look forward to reading any advice your readers have to offer!
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When I was single, I rented out a floor of my house. (We each had two rooms & bathroom to ourselves, shared a living room, dining room & kitchen.) I made a strategic decision to charge below-market rent so I’d have my pick of roommates.
I told everyone I knew I was looking for a roommate, and that is how we found each other. She was a friend of a friend.
The one thing I wished I’d done differently was to have her agree to change her cat’s litterbox regularly. She was gone for days at a time and the litterbox would overflow.
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For a couple years, I rented a house and basically sublet out two bedrooms to housemates.
This was not a good situation, for several reasons that probably wouldn’t apply to others. I would *never* again rent a place with the idea of getting roommates. I also learned that I value my privacy more than I had realized, and wouldn’t want to take in a border at my house unless finances were really really tight. (And I was lucky that my two roommates only stayed there maybe four nights a week — I often had the place to myself.)
If times did get tight enough, I would consider renting out a room of my house. I would structure it this way:
* A fixed amount of rent per month.
* Tenant gets shared use of common areas.
* Make sure there is some basement/attic-type storage available to tenants.
* Tenants responsible for own food, but informally-shared condiments, milk, coffee, etc.
* Tenants must help with housecleaning, and clean up their own dishes.
Things to be aware of:
* Make sure parking isn’t an issue.
* Utility expenses might go up. For example, I keep my heat down to 60, and turn it up to 65 for the few hours a day that I’m home and awake. If I had housemates, I’d probably need to keep it warmer for longer periods of time. Tenants might have window air conditioners.
* Be aware of bathroom scheduling.
* You might need to keep the common areas of your house cleaner than you would living on your own.
* I would make sure you have a private area of your home to “chill out” in. If your bedroom is big enough, then maybe thats adequate. Ideally you probably want a couch and a TV (or whatever) either in your bedroom or in some other private room.
* Your tenants will expect to have included use of cable TV, ideally with outlets in the bedrooms, and wireless internet access.
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It’s good you are actually thinking this through. To answer the individual questions, I’d start off just including the utilities if you have a good handle on what they run.
For the food, I think you may be assuming too much. Do you really want the roommate at every meal, all the time? Something that starts out novel and fun soon turns into a chore.
I also wouldn’t expect to find someone who is necessarily going to fit into your “urban homesteader” plan. If you do, great. But make the decision now if them not participating in your hobby is OK or not.
I’ve seen one situation get “weird” when a friend helped out another friend by renting them a room at a low price to help them out in a rough patch, and the renter didn’t pitch in around the house. Tread carefully and know what you are getting into. A rental of “Pacific Heights” might be in order.
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I rent a bedroom in a woman’s home. We found each other through Craigslist ads- this is a really good place to find a room or a renter if it’s popular in your area. Otherwise, I’d use whatever other classifieds are popular. Craigslist is free, so ads can be much more detailed than in a newspaper or other paid ad service.
Because different people have different habits, I think charging shared utilities is best- that way they have incentive to keep costs down.
Based on what I know from the post, I would word the ad like this:
Need a place to call home? We are looking for someone to rent a 9′x12′ bedroom in our two-story house located near Birch St. and River Drive. It’s a great place to live: close to [university, downtown, shopping, hiking, etc, pick two or so]. Our family loves hunting and fishing, and we also like to live “naturally-” we garden, line dry our clothes, and use wood heat in the winter. Rent would be $500/month plus 1/3 of the utilities (power, trash, and cable), which is usually about $40. I love to cook, and for just $60 more, you can share three meals a day with me and my husband. Call Penny at (222) 222-2222 to see this great room!
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IF YOU’RE RENTING AT A FLAT RATE, I suggest learn as much about your tenant’s daily habits as possible. You know your utilities will change, but by how much? My example:
I had a friend-of-a-friend living with me for most of last year. I rented a room in my house for a flat rate. I expected my utilities to change, but I wasn’t sure by how much. He didn’t shower often, but his GF made up for it by taking LONG showers if she was at the house. He didn’t leave the lights in the house on, but his computer, printer, speakers, etc were ALWAYS on. He worked from home, so he often changed the thermostat settings on a whim.
If I had it to do over again, I would have charged him a lower rate and a portion of the utilities to help keep his poor habits in check.
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We have a bit different situation as we own a side by side duplex that is designed to rent out one side. It still somewhat applies as we do share the yard and garage.
The key to success is being upfront with everything. It seems weird to put somethings into a lease but if they aren’t there you have no grounds to stand on should something happen.
The nice part about an owner occupied space is that you can be a little more picky about who you rent to. The law gives more flexibility.
HollyP is right if you can get someone word of mouth that is the best. At least you know someone who knows the person, kind of a personal reference. It seems less risky although in the end it maybe it isn’t
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My mum rents out a room in her place.
Rent: She charges a flat weekly rate with utilities included.
Food: She will include them in the meal if she gets a heads up. By default she assumes they won’t be eating in. She charges $10 for each meal. It’s good home cooked food so $10 is a good deal for what you get.
The renter has their own room and bathroom. They’re responsible for keeping both clean including their own laundry.
Seems to work out for everyone.
Cheers,
Gwynn
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I would also do a background check. Where I live the police will do it for about ten dollars. I think that this could be a good situation, but there is also a lot that could cause problems–some minor, but some major.
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We did this with my sister, where the situation was a little different because she was family. The going rate for a 1 BR apt around here is ~350-400. We charged her $350 but included food and utilities.
Here’s what I would do:
Charge monthly and include utilities in the rate you advertize. That way it’s a more simple transaction (and less often than weekly) and you don’t need to calculate anything. I would just estimate your higest utility bill and add on ~60% of that to your rent. “Lease terms negotiable” will let them know that you’re willing to prorate if they leave in the middle of the month or something.
Advertize the rate without board costs but then when you select someone, ask about their food preferences and see whether they would be interested in eating with you (maybe have them over for dinner as an “interview”). If they are, figure out what to charge them and make it clear what the cost will include. Maybe they eat dinner with you but they are responsible for their own breakfast, lunch, and snacks. Even if they say no to the food, I would factor in a buffer of ~$20 a month (to the rate that you advertize) because they will probably eat with you sometimes or borrow some milk, etc.
I would ask around to friends who have similar lifestyles if they know anyone or put up fliers at a college targeting their “green living” club or “college democrats,” maybe even try to contact the leaders of these groups. Although I would consider factoring in extra utility costs and allow them to use your dryer (if you have one) if they want to.
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I bought a house that I could afford without roommates, but it came with so much space and extra bathrooms that I decided to try it out. It’s not a big deal to me as a single guy. So far every person that has every rented from me has been a friend or friend of a friend. I write a long letter outlining what will and won’t be expected of them and what they can expect from me. They have to agree to that. Make a very clear deadline for rent payments. I like rolling utilities into rent, but be sure to estimate a significant increase in those bills.
My situation works because my roommates quite amicably share a bathroom (and there’s a third half bath) and have their own bedrooms and a low use dining room and family room so we can all spread out. But they have TVs and/or computers in their rooms so it’s “their little world.” But they’ll join me in my living room or ask to play video games. Every house, situation and person is unique though. I consider myself extremely important.
The things I’ll stress are getting everything agreed upon up front. If you think they should be taking out the trash every other week, you better make sure they know that and agree to it. If you can’t stand when people leave dishes on the counter tops, mention it! And remember, some little things may annoy you that you might not think of. Will they be a huge burden on you or just something you can shrug off while enjoying the additional income?
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We rent 3 rooms in our home and have been doing so for over 2 years. We’re a bit like Penny in regards to urban homesteaders. Here are the items I would recommend:
- No pets. More problems than good.
- We charge by the week or month a flat rate. It makes things easier in the long run instead of arguing over how much electricity they used.
- Expect them to leave lights on and use window air conditioner, so include that in your monthly rate.
- We keep food out of the rent, but sometimes we’ll offer to share a meal out of goodwill. We have one separate fridge and pantry space setup for all the roommates to share.
- Cable TV not required (we just got it this month).
- Craigslist has been my main source of tenants
- Month to month works best, since it gives both parties flexibility if it does not work out.
- We get cheap furniture from yard sales and offer the rooms furnished or unfurnished. This helps a lot of people.
- Regarding wording, the key items are make sure you don’t put anything discriminatory and explain what is included/not included.
- Make sure you are clear on your eviction procedure when they move in and are within the laws of your state. Don’t stray from your procedure
- Make 1 person the landlord that handles all issues and payments. You don’t need them acting like children and playing 1 spouse off another.
At $400/month in my area, it is worth the hassle for $1200/month and my wife to be able to be a stay-at-home mom.
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I think this is the first time i’ve ever responded on this group. I am a bit of a financial nut. I have always bought bigger homes than i need and then rent out the addl rooms as ‘income’. My last house was 6 br/4ba. I only used two bedrooms and i put in a master bath for our exclusive use. I rented 4 bedrooms and that income alone paid my entire mortgage. I also try to have only two people max share a bathroom. Of course I had utilities to deal with but it was a small price to pay in comparison.
I have had some DOOZIES as roommates, but i’ve also had some great ones I always wished would move with me. Some have been so good that i even offered free rent when they lost their job just to keep them there when they found employment.
I always charge a flat rate and share my WiFi, Cable, Util etc. I don’t want that argument of me telling roommate to turn off lights to save $, and they say well your PC runs 24/7. I pay all utilities PERIOD. I explain up front the way i keep MY house. I control the thermostat, NOT THEM. I expect there to NEVER be dishes in the sink. If you see something out of place, pick it up etc. I have my ways and as long as you agree we all get along harmoniously.
I have been fortunate enough to always live near universities, GRAD students are the best! But they do leave eventually. I had one grad student that worked so much he slept in the lab most nights and I was usually gone to work (IF)when he came home to shower the next day. We didn’t see each other but a few times in passing the entire time he lived w/ us.
Retail workers or people with two jobs is another great roommate. They are almost never home when you are. And they treasure what little free time they have that they don’t spend it in your home.
I always remind them they are renting a room and i expect them to be courteous to everyone else in the house by picking up after themselves, cleaning their dishes, etc. However when I post the ad, i explain AS MUCH AS POSSIBLE about the living situation and expectations OF THEM. If they aren’t up to the task of being a good citizen they generally won’t respond to my ad in the first place. I ALWAYS include the word conscientious in my ad. That is a MUST.
I advertise lower rent than any other rooms for rent in the area so as to steer as much traffic to my ad and then I can weed out those that aren’t a fit for the household.
I take responsibility for keeping the common areas clean but they keep their bedroom and bathroom clean.
All in all it’s been great renting rooms. I love getting a ‘refund’(rent) after i pay my mortgage. It can be hard when there is tension but i’m a no BS kinda guy so if there is something bothering me I’ll say it to clear the air. It’s also hard renting to college students that have never been away from home. Sometimes it’s nice to have them look up to you like parents, You feel like you still have a chance to shape them into good citizens, but other times it is hard when their parents didn’t teach or prepare them for the real world.
Sorry for the rambling, but i think renting a room is the way to go!
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Ooh, finally something I can chime in about. I’m a homeowner who has been renting out a couple rooms for the past 3 year, so I’ve had some experience with this.
It’s good that you ask these questions ahead of time, because it will help you figure out and be aware of some things that will work to your advantage on taxes.
First of all, my roommates and I all have access to the whole house with the exception of our respective bedrooms. Thus, when I have 1 roommate (2 occupants) for the full year, my house is 50% rented, 3 occupants = 2/3 (66%) rented. 2 occupants for half the year and 1 occupant the other half = 25% rented. This is important to figure out ahead of time because it is a critical part of the schedule E that you have to fill out when you do your taxes (assuming you’re a U.S. Landlord).
Secondly, I composed a renters agreement that states my expectations for behavior in the house. This was tedious, but I’ve had people decide not to room with me because my expectations are too high. This wasn’t an official lease agreement, but it is something to point to if an issue comes up (domestic or legal).
For rent, I charge the full month’s rent and utilities at the beginning of the month with utilities based on the last month’s bill. The renter’s agreement also states that I must be given one month’s notice before a roommate moves out and that they must pay through that time frame regardless of whether they are there. Many landlords charge a deposit in case they need to use some of it to cover instances where the renter moves out early, but I do not since I know the people I rent to.
In regards to Utilities, I charge my roommates a fraction of the total utility cost based on the number of occupants. In your case I would charge them 1/3 of the overall utilities. One thing to be aware of, though — it turns out the government makes you include all incomes from tenants (including utilities) as income on your schedule E. You can’t just call it reimbursement. The total utilities then are also included as rental expenses. Oddly enough, it doesn’t fully come out in the wash. I tried both scenarios in Turbo Tax and it turns out I’m getting less money back by including the utilities in my income, but that’s the way it has to be (unless anyone can tell me another way to do it).
For food, I’ve found that it just works best to designate a cupboard and freezer/fridge shelf for each of my roommates to keep their food. We share perishable goods such as bread, fruit, and milk and try to rotate who purchases those items, but most everything else is “buy it for yourself”. I do let them use my kitchen goods (plates, pans, etc) because I have a well-stocked kitchen in that respect.
Lastly (I’ll get to advertising in a minute), because you’re renting out part of your own home it is legally okay to be picky about who you rent to. In the fair housing act this is nicknamed the Mrs. Murphy exemption. The absolute moral implications of this exemption are debatable, but overall I think its a good idea — you shouldn’t be forced to rent to someone you hate, even if your hate is wrong. It will just cause to much unrest. Still, the FHA says that you can’t use discriminatory advertising, so watch what you say in the official ad. I once used words like “would prefer” or have also described myself as “religious” in the ad. Smart renters will know to avoid people that have qualities with which they will clash.
Lastly, two resources to check out: Turbo Tax’s rental property page:
http://turbotax.intuit.com/tax-tools/tax-tips/investments-and-rental-property/5568.html
And a book recommended by a fellow landlord regarding renting and taxes (it’s that time of year):
http://www.amazon.com/Every-Landlords-Tax-Deduction-Guide/dp/1413309062/ref=sr_1_1?ie=UTF8&s=books&qid=1233325809&sr=1-1
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Would you be willing to share your renters agreement?
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Was the renters agreement ever shared? I would love to use that as well if possible. Thank you very much.
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OH and I always tell them they are responsible for their own food. I even give them their dedicated space in a pantry or cabinet and the main fridge. I also put dorm fridges in the rooms for drinks. That keeps them from taking mine and vice versa.
But I do say that I will share what I have, and they are welcome to it, IF THEY ASK first, but to always replace what they take and NEVER take the last of something.
I also love to cook large meals so If i’m in the mood to cook large, i always make enough for everyone and invite them to share but if they don’t partake, it’s leftovers for me.
otherwise they are on their own.
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Darn sorry… I keep remembering things.
ALWAYS put agreement in writing. Even though technically it’s your home and you can kick them out easily, it’s just better to back yourself up with documentation.
AND NEVER rent to friends or family!
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I had great luck using Craigslist for roommates when I lived in LA. I decided to get a 2 bed/2 bath apartment I could afford on my own, and then rent out the other bed/bath.
I was afraid of identity theft, so before I got a roommate, I:
* got my mail sent to a PO box
* changed my bedroom doorknob to one that locked with a key (easy to do, knobs sold at Home Depot)
* got a lockbox and locking file cabinet to keep my important documents in
Rent/Utilities
With the first roommate I had, I charged her a flat fee for rent and then we would split utilities. This was a pain because the utility bills come at all different times of the month, and it didn’t work out that well. With my next roommates, I guessed at an average utility (taking into account summer being way more expensive than winter) and charged them a flat monthly fee.
No pets – this solves a lot of potential problems.
And then, as far as selecting them, I would place an ad in Craigslist, interview the most promising candidates, and trust my gut as to whether they seemed like a good person or not. I also said I was not willing to take anyone who was an actor or otherwise in the entertainment profession – real day jobs only.
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I rent a room, as do two other people, in my landlord and landlady’s house. We’re charged 1/5 of the monthly utilities, plus a flat monthly fee. The lists above are quite good, but other things you might want to consider are:
- Guests: Can they throw a party in your house, or have their significant other over for days on end? If not, make that clear.
- Noise: Can they blare music at 2:00am? Is there a time after which you’d appreciate it if they weren’t practicing for a night out at the karaoke bar?
- Smoking: Do they? If so, are they willing to do so only outside?
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When I moved out of my parents’ house, I moved into a roommate situation where I had one of three bedrooms, the owner another, and one more roommate in each of the other bedrooms.
It worked out fairly harmoniously. Each of the non-owner roommates paid a fixed amount of rent + utilities each month (budget plan). I thought I had paid a security deposit, but it turned out to be last month’s rent. It would probably be a good idea to have a security deposit, as well as a written agreement on house rules (smoking, pets, overnight guests, political signs in windows, locking doors all the time, security procedures etc.)
Before taking on roommates, the owner had taken the landlord class through our municipality; that would be a great thing to do also. Also, every new roommate had to “audition” with all of the existing roommates before an agreement would be made.
Sometimes we would cook and eat together, most of the time not. At some points we had designated spots for our kitchen items and fridge items. None of us wanted cable TV; we did split the cost of a DSL line.
All of us were pretty eco-conscious and accepted the thermostat in the low 60s in winter. One roommate from a more southerly area had a space heater; the owner helped subsidize a more efficient one as well as other efficiencies for each of us.
When I had a window air conditioner, I used the Kil-A-Wat to calculate my usage and added an extra $20 to my rent at the end of summer.
Sharing water (i.e. showers, laundry) was never too major of a problem. It helped that we had a second shower in the basement and could hang clothes in the backyard.
We shared the living room and dining room fairly equitably as well. Negotiating TV time is less of an issue if you each have your own DVD-playing computer.
In the end, the only issue was that of organizing / clutter and chores. The chore rule was “whoever notices first.” I have ADD and was nearly always the last to notice and consequently did not contribute as much. I asked the roommates to create a written schedule with me. “Great! We’ll put it in this drawer.” No dice for someone who needs visual reminders. I think I was just a poor match for the others in that respect.
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If you’re aiming for a student, try “mature” or “graduate” students only. That sends the message that your home is not going to be party central, and the students will be grateful to find a quiet place to live and work.
“Young professionals” also gets the same message across.
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good points shuchong:
some of my house rules are NO SMOKING indoors PERIOD by anyone. I have allowed outdoor smokers in the past but one recent roommie used to REEK of smoke all the time. It was so disgusting to me and when the HVAC would kick on i could smell the smoke from his clothes in his room throughout the house. So smokers on a case by case basis. It’s more about the person.
If you come in late, please remember other people live there.
My house is NOT a party house but with notice they are welcome to host small gatherings for the game, special events etc.
I allow overnight guests, IF I MEET THEM FIRST. I do not want strangers in my home that I am not aware of. But if they are dating, a significant other is welcome to spend the night in moderation w/out permission (once i’ve met them).
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We rented out a spare room to both family and friend before, so we were somewhat lax as to dictating rules. Which was nice because you then aren’t some whiny ranting dictator, but on the other hand too they then can easily abuse it. We just did a verbal agreement, I would not recommend that because who’s going to remember little agreed upon details in that way? Go with a signed document with both parties have a copy of, so if there’s any disputes just whip that out and there’s the tie breaker.
We just charged a flat rate with utilities included. Trying to split a bill evenly, or like mentioned above, if someone has a habit of leaving lights/AC/etc on, trying to ‘guess’ that they used 60% of the electricity while you only used 40% is a hassle. Put in writing that they agree to help save power by turning of lights, etc as much as one reasonably can. People forget, so don’t fly off the handle or take it personally when they forget to turn it off.
While I certainly do miss the extra $300 ($600 split in half) I got a month. By the time you spend the money on the extra consumption from water/power/heat, I wasn’t left with much for all the hassles of dealing with it all. If you come home late from work and you want to just sit on the couch and watch a movie, but you can’t because the other person is on there. The extra $100/month in profit doesn’t seem worth it then.
I don’t miss having tenants, I like having the house to myself and my gal.
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I’ve been renting out a room in a house for about a year, and my landlord charges me a flat fee for rent, utilities, and 3 meals a day (I work from home). While some people have recommended rolling the utilities into rent, you may want to have some leeway depending their usage – for example, instead of $500 inc. utilities, you might want to consider $400/mo + $50 – $200 depending on usage (use the prices in your area, obviously). Offer to have it start at the low end, and then adjust it after a You can still have them roll it into the rent payment, but you’ll have some flexibility in charging. That way if your tenant likes long showers or has 3 computers or likes to run a space heater or AC unit 24/7, you’ll have some sort of control over that, but it won’t have the hassle that splitting utilities brings (bills at different times, checks for weird amounts like $11.20 that you have to make a trip to the bank to cash, etc).
Also, for food, I would give yourself as much flexibility as possible. I know that sometimes my landlord simply doesn’t want to cook, or he wants to go out to dinner with his family, or something like that, but because the cost of board is included in my rent, he feels obligated to provide meals for me, which can lead to resentment over time. I’m not sure what the best solution to this problem is, but it’s something to consider. (This issue is what’s actually caused my landlord to not renew my lease, so don’t take it lightly.)
And to echo what everyone else has said: Craigslist is your best friend!
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As far as water, we have well, so the only issue is heating oil, though that is also something that I wouldn’t have considered.
Nitpicking at first would probably make everything clear to all parties involved. I like the idea of having a dinner “interview.”
Keep the tips coming! I’m taking notes!
Pets: We have three cats, two dogs, and nine ducks, so I don’t think there is any room for animals.
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I don’t know why, but as a person who rents, reading this kind of post makes me cringe a bit. I’ve been in situations where someone is renting out a room in their house and they are *not* clear with their expectations beforehand and so I am prompted to write a bit of a response to the article.. .
I would caution someone before committing to renting out a space – how flexible are you really when it comes to other people and their schedules? And how willing are you to have space available for people to cook/ lounge/ park/ wash their clothes, etc?
I think a big thing, from a renter’s perspective, for someone to consider is that this is a *person* who will be renting your place and that person would like to have some of their freedoms… they aren’t just a $$ in your bank account. I don’t think it is truly fair to expect someone to be completely invisible/inaudible if they are in the same space as you, and I have run into my fair share of folks who are renting their spaces out who think this is a possibility.
So, from that, I would consider what kind of situation you would like to rent in…
A weekly rental to me would signify a more temporary situation, so you would probably be able to stipulate more specifically the types of conditions you expect; but with a monthly renter, I think you might need to be a bit more flexible as that space will be that person’s home.
IF you have a separate entrance, or can make one to that part of the house, I would recommend it.
And re the poster above and “chores” – my brother built his house specifically so he rents out the bottom two levels to renters – and every week he has a cleaning person come in to clean all the rooms – no exceptions. He builds this cost into his rental, and this ‘invasion of privacy’ (!) into his rental agreement, so that his investment (ie his house) maintains its cleanliness. I would strongly suggest this as a way to go especially if you are considering renting out more than one room.
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Most people do not think about this but you will be required to report the rent on your income taxes.
Your house will be considered a rental property and a portion of your house will have to reported on your Schedule E (passive income) but you will be able to deduct depreciation.
Additionally you will not be able to have rental loss if you live in the home as well.
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@ liz: thanks for bringing up the renters point of view. I’ve only shared housing with people I was already friends with, so I’m unfamiliar with this type of situation.
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I rent part of the house that I own to a friend of mine. Although we get along very well, I think what makes it work well for us is that we don’t spend a lot of time together, despite the shared areas of the house. Many of the other ideas and suggestions that have been left here are great, as are the tax reminders, so I won’t rehash.
What I will add is WRITE A LEASE. Putting it in writing, even when it’s a friend or family member, seems like overkill but those legal documents were invented for a very good reason. Use them to protect yourself and the other party.
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I sublet a room in an apartment once and I’ve known a couple of people that regularly rented rooms out in their houses so I can pass on a little bit of (partially second hand) advice.
Neither landlord offers board it’s just a rooming situation. Both obviously allow use of the kitchen and bathrooms (with rules and schedules), one allows some limited use of the common living room area and the other restricts tenants to their rooms. If you plan to allow laundry room access it’s best to have that on a schedule. Negotiating one day per week that is their day is a good method, some people will have laundry in all the time. One of the landlords I know had a tenent who he swore must have been taking in laundry from her friends the amount she was doing all the time (maybe she was).
I think the most important thing would be to have very clearly established rules for as many things as you can think of. Kitchen curfew is a big one, you probably don’t want to hear pots and pans clanking (or maybe even microwaves beeping) at 2am. If you have fewer bathrooms than people then bathroom timing is important, if you get up and shower at 6:30 every day you can’t very well rent a room to someone with the same requirement.
Be very clear about what is expected as far as cleaning up, both landlords I know insist on dishes being washed immediately as soon as tenants are done eating. One allows certain items to be left in the bathroom with assigned shelving and the other insists that all personal items be brought back to the bedroom – never underestimate the ability of some people to spread out and occupy every available surface with their stuff if allowed to. Any sort of cleaning of common areas that you expect to be done should be spelled out as clearly as possibly before hand. Do you want the bath mat picked up and hung to dry after a shower or the lint screen emptied on the dryer? Make it clear before hand, assume the tenant will do absolutely nothing of their own volition because some will.
Personally I think offering to share anything consumeable is a bad idea unless you are perfectly willing to be the purchaser of the shared products every single time, at least until you know someone and their habits well.
Designate any fridge or cabinet space they are allowed to use. When I sublet that room my cupboards and fridge were constantly packed to capacity to the point that I couldn’t put my own food in.
Establish clear rules about guests and my advice is to limit them or ban them all together. You’re offering a (quite likely very temporary) place to sleep under a roof, not any kind of home. Again, if you have a long term renter that you become friendly with you may want to relax the rules a bit but it’s best to be very clear and fairly restrictive up front I think. There’s no such thing as too many rules up front, the person that is willing to follow them all is the one you want.
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I have found that by only advertising in online formats, I get a higher level of potential renters.
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Several years ago my husband rented a room when he was working an outoftown contract. It worked well for him. If I remember correctly, he payed a monthly rent and a flat rate on the utilities.
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I have been the “house guest” twice. It is expensive living in Boston, and so this was the best choice for singles. In general, if the home owner lives the house, the place is kept in really good shape compared to a rental apartment.
The first time was a disaster. There were multiple guests and the turnover rate was high. My landlord didn’t interview the candidates well and she ended up having a pedophile ex-priest live there with a man who was a former victim.
The second place was a great success. My boyfriend also ended up living with us as a third roommate. We all got along, split the bill three ways for everything.
What made it work though is that my landlord rarely cooked, and so the kitchen was always free for us – PLUS – he was always hanging out at the living room watching TV and we didn’t. If there is enough public space, it will usually work out. I agree with some of the readers that GRAD students are the best. They usually work late at the uni or stay in their room.
The bottom line is – if you treat the other person with respect, they generally would treat you with respect and be considerate as well. If you impose too many rules, then no one will want to live there.
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For the past 5 months I’ve been renting out a bedroom in my house to a girl in her 20′s. All utilities are included in the monthly rent. She moved in her boyfriend also, so I got a 2-for-1 deal without being consulted! Hmmm….not impressed…
About three months ago, she gave up her job and started going to college by night. That means she’s at home during the day with her student boyfriend and they have the heating is on full blast, when I get home from work the house is like a sauna. My last heating bill nearly bankrupt me! And, because she now has no job, she’re relying on a grant and there are rent arrears and she’s dodging me…. yadda yadda yadda…
What I’ve learned:-
- you will lose your privacy, no matter what kind of arrangement you have with your tenant. You will never again be able to run downstairs in your underpants in the middle of the night to grab a glass of water!! LOL
- carefully vet any prospective tenant, find out why are they leaving their last lodgings, contact that landlord to see if they pay rent on time, are responsible, etc
- schedule laundry days
- schedule morning times in the bathroom
- schedule cooking times
- settle any problems immediately, don’t let issues fester or you’ll resent your tenant
- a certain amount of noise and disruption will be inevitable in the wee hours of the morning
- agree what will happen if your tenant loses their key, are they to be responsible for the cost of changing the locks?
- stipulate that it’s a single occupancy room – no boyfriends or girlfriends or one-night-stands
- get SOMETHING in writing with a 2 week notice period by either party if they/you want to terminate the lease
- rent is to be paid promptly. If it’s due on the 1st of the month, then it’s LATE on the 2nd
Best of luck!
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My only experience there is when I spent a week in ireland to learn English. There were classes in a school nearby, and I lived in the house with other students, some of which stayed as much as 2 months.
Supper was included in the costs, but lunch wasn’t.
Sadly, I can’t remember how much it was.
I’d suggest deciding exactly what you want to do. If there is a program with foreign students where you live, that might be one of the options, although chances are it won’t (check anyways, if you’re interested). You could also offer bed&breakfast but you don’t seem to want people who would just stay one night.
If you want someone to stay for a while, that would be more like a roommate, it seems to me. If it’s by the week, it might work well for tourists.
Whether you include food or not, you need to be absolutely clear so you don’t have trouble later. You could have a written contract with a set fee per meal per day, or per week, or per month. The tenant could choose while signing whether they want to take advantage of it or not. If they don’t, then they’ll have to take care of their own food.
If they pay for your food and you cook it, you shouldn’t feel bad about asking for a fee for that, too. Whether you enjoy it or not, it’s work as well.
I think that’s as much advice as I can give. Hopefully you’ll find a solution that works for you.
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My husband and I occasionally rent out a spare bedroom (or both) in our house to college students. He works at a company that hires college kids for the summer, and they have a formal system of listing housing options that other employees are offering. I like having college-aged people living with us (I’m 24, my husband is 27, and we don’t have kids). We charge $500 for a room, and it includes all utilities, satellite TV, and wireless internet.
As far as food, we were friendly with our renters, and would share cheap stuff (i.e. vegetable oil, mustard) and they had room in the fridge (which did get a little tight with 4 adults living in the house) and they had a shelf in the pantry. They were allowed the use of pots/pans/plates/etc. and washed up afterwards. We only rarely had problems with cleanliness.
The big selling point that we had was that our rooms came furnished. The people that lived with us went to college out of state and were working at my husband’s company for 3-9 months at a time. Instead of having to find a short term lease and either move or rent furniture, they could stay with us and not have to bother. We were able to borrow furniture from my parents and buy the rest from Ikea, so it was pretty little outlay–less than $200 to furnish 2 rooms.
We are sort of in a unique situation, but it worked out well for us–our mortgage is about $700/month, so one renter almost covered it, and when we had two, our mortgage was more than paid for
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Bingo to Comment #4, right on the nose.
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Put an ad on the bulletin board at the library and grocery store,
Get a standard tenant agreement from a stationery store. Add your own codicil, i.e. re noise, food, utilities, security deposit, guests, pets.
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The practical advice on setting guidelines with renters is great, but what are the tax ramifications of renting out a room, and can there be any legal issues with homes that are zones as single family dwellings?
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I have to agree with several other posters and say that Graduate Students make great roomates. Since I own a 3 bedroom house in one of the nations largest cities I have had a easy time finding quality roomates. Some places that may give you some good leads are
-Church/Mosque/Temple
-Clubs or sports teams you participate on
-Friends or Friends of Friends
-Grad Students/Medical Students/Seminary Students
I so far have rented to a Medical Student, a Law Student, and a friend from church. They all had their quirks but overall were nice guys who needed an affordable and clean place to live. I have always charged a flat rate and expected the check on the first of the month. This cut down on the hassle of getting multiple checks on multiple days throughout the month. One tenant even created a scheduled check that was sent from his bank on the first of the month.
The extra income has allowed me to make updates to the house that otherwise would have been out of my budget range like travertine in the bathrooms, the 8 foot privacy fence, and the Wii. Yes I have given up some privacy and yes I have wanted to kill one of them for thinking he could store wrapping paper in the furnace closet, but overall it has been a good experience.
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I have never considered this because I am concerned about safety- live near a major city and I have a child still at home. I have a friend who did this- her problem has been that she did it on a “handshake” and getting someone evicted here is not easy. The woman is neat and was quiet but often doesn’t pay rent and then had a boyfriend who brought drugs into the house and then kicked in my friend’s door. The boyfriend is sort of gone(he shows up at the door sometimes) but the woman is still there. My friend thinks of the woman as a friend so she didn’t call the police!! I think the background check and the written agreement is a must(and call the police if you need to)
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I commend those of you that can have roomates/tenants within your own living space.Just the thought of sharing a bathroom with someone I’m not closely related to would drive me to insanity…The smell of some one elses’s …excretions/BO/gases/..Even the lingering smell of toothpaste left in the air immediately after some one brushes their teeth,if it comes from somebody else besides myself would cause me to puke.
Seeing the water splashes on the bathroom sink and counter,and realizing that some one just probably spit into that sink after brushing their teeth…or washed their dirty hands after(hopefuly)wiping their…. or somebody leaves body hair on your shower….and that now you have to use that sink or shower….specially if its still wet….
As you can probably deduce..I don’t use public restrooms or hotels too much..
Just glad I never had to consider having a roomate even as I was having some financial
problems and living by myself in a 4 Bedroom/2 bathroom house.
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I rented a room in a home straight out of college. From my situation-here are my thoughts:
1) Charge monthly rent and include all utilities except phone, internet and A/C. (A/C is commonly +$25 a month for a window unit.)
2) Define you expectations for use of a common space. Is the living room off limits in the evening or all the time?
3) Make room in your kitchen and define boundaries. A shelf in the fridge and space in the cupboard are a must. Be clear about dishes. Do you want them washed in two hours or loaded into the the dishwasher?
4) Give some thought to other tricky issues. What happens if you have company, if your tenant has company, How long can a guest be over, Are you able to provide washer and dryer access?, Parking?, Pets?
5) Are you comfortable with your tenant house sitting your home for an extended period of time? This was the question that my former landlord asked themselves of their tenants.
6) After all of these posts scare the you to death…please remember that there are good tenants out there who are working hard and trying to make ends meet. I became good friends with my landlords and will forever be grateful to them. I was able to get a start straight out of college without incurring the expense of setting up an apartment on a public servants salary.
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Absolutely no pets allowed. My sister-in-law moved in with us. While I have a dog myself, I couldn’t stand her dog constantly relieving himself in the house.
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In my current share, we avoid a lot of potential tension regarding cleanliness by splitting the cost of a cleaning lady twice a month. Worth every penny. Just remember that if you pay them more than $1000/year (unlikely outside of major metro areas) you need to do withholding.
We have a “kitty” to cover shared expenses like paper towels, dish detergent, etc. (and, by special agreement, eggs). When it gets low, we each pay ten bucks or so into it. We share condiments, spices, oils (things a single person probably wouldn’t use up by herself anyway), but other food items are individual.
It works well for us because we’re all adult professionals who just want a low-drama living situation. It may be harder to find people like this in areas where housing is less expensive and so you don’t find women in their thirties still sharing.
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These are all really good suggestions. I definitely agree with talking with a real estate lawyer and a cpa about the legal and tax ramifications respectively. I would also have them sign a Lease and have the rules and such attached to that document. I would most definitely do a background check if you are welcoming a stranger into your home, but have them pay for it as part of the application process and sign a document that they agree to allow you do the check. However, I wouldn’t just have the local police do the check – they can only check the local databases. There are companies out there possibly locally in your area that can do background checks for $25 or $30 that will be able check all databases throughout the U.S. I also strongly suggest contacting your local real estate investment club. They are a wealth of information about renting rooms and you could get good references to lawyers, cpa’s, companies that do background checks.
My husband and I are currently renting out a room in our house to a friend while she’s finishing up her last year of college. We are currently doing a flat fee monthly at $300 which we reduced from current market rent for a room to help her out with expenses. We told her that she can stay either when she finishes school or we have a baby – whichever happens first since her room is where the baby is going. She handles her own food most of the time and is more than welcome to share our dinner if we have extra. I do miss my privacy and the non-drama. We were more lax with the rules since this was helping out a friend and it wasn’t like we were renting out our rental property or so we thought. However, when we have added rules along the way, she was very understanding and has abided by them. I don’t think we’ll ever do other pets again, because her 2 cats and our 2 cats are not really getting along that well, especially the first few months. Right now there’s kind of an uneasy peace between them.
Good Luck!
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I work in commercial property management and one of the things that happens frequently (about 95%) in commercial or retail leases is that utilities etc… are estimated at the beginning of the year with a monthly amount figured in, and then reconciled at the end of the year with either a credit or additional bill coming due.
I think the reason most residential landlords don’t do this is that your lease terms are generally much shorter (commercial leases range from 5-15 years) so it’s more of a hassle if you have to reconcile every month or two due to people moving in/out… but it would be the most accurate way to go.
I’ve often thought it would be interesting to start a 21st century boarding house… I wonder what it would be like…
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I used to be a renter of someone else’s spare bedroom room, then got a similar place of my own nearby and rented out the spare bedroom.
The way I’ve handled it is to write up a contract and make the terms as specific as possible: total length of the contract, rent per month, date due per month, fees for late payment, how utilities are to be split, what happens if the contract needs to be terminated early, what the common areas were, etc. This was all made really clear, even though I only rented to friends or acquaintances, just for piece of mind. Doesn’t mean you can’t be flexible with things, but it never hurts to have something in writing just in case things go wrong… at the very least, you’ll have a default to go back to.
At the end of the contract, I put a section about “roommate behavior” and stated that both I and the roomer were responsible for adhering to it. It contained stuff like how to deal with guests, alcohol, smoking, pets, etc.
This all worked out mostly well, though in retrospect it might be a good idea to put something in about dishes and food as well.
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To reiterate what a lot of folks have said:
put *everything* you can think of in writing.
Make sure you’ve outlined how to end the relationship–for both the renter and the landlord.
Consider building in the cost of a cleaning person. Nothing is more frustrating than to discover that your new roommate has different cleaning standards than you do, and you’re stuck doing more of the cleaning than you want. (I mean, this can be a real issue with your lover, so just imagine how annoying it could be with someone you’re not personally invested in!)
Is there any way to make one of “the common rooms” an extension of the renter’s space? For example, if the dining room is actually a separate room, could you move the table into a corner of your living room and make the dining room into a secondary lounge space? On either side of the equation–renter or landlord–it’s often nice to know that there is a place for you to go in your home that isn’t your bedroom and that won’t be occupied by someone else.
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Some of this is what I remember, some of it is what I’ve observed, some of it is what scares me to death:
1. Absolutely get your renters vetted – AND KEEP YOUR BILLS AND ID LOCKED UP. I know SEVEN people who’ve had their identities stolen. No, they weren’t all from renter situations – but it’s an increasing problem, and you just want to make sure you have a secure place to keep this information. It’s for your renter’s security, too; if your information is secure, you won’t have to worry about them.
2. Control your own environment – if you keep the temperature low in the winter, high in the summer, keep the controls, but let renters know ahead of time. I’d be perfectly happy with woodstove heat in the winter (I build good woodstove fires!), but I need AC for my health; I start it early in the season, and run it until it’s cold.
3. If you have a multi-cat household (like Jen@46), Feliway is worth the investment – it’s feline pheremones that calm down combative kitties.
4. Make clear in a lease at what point your guest’s guests become additional tenants. If your guest has someone sleeping over three nights a week, you now have two guests, not one, one of whom is not paying for that privilege. If you don’t permit overnight guests, put it in the lease.
5. Everyone else here has covered most of what anyone is likely to encounter – cleanliness, dishes, laundry day, noise permits, etc. For Penny, specifically, I think it’s a good idea to list your family lifestyle, if only to avoid renting to a well-behaved, quiet, non-smoking, animal-friendly vegan, who is prepared to live with nine ducks but not that dead deer in the kitchen, or the bunnies in the stewpot. Make sure you give your potential guest a glass of well water to sample! Some water is very distinctive, and could make or break a guest’s choice. It wouldn’t bother me, but it might well bother others.
6. For those of you who list your rent as being due on ____ [specific date], make sure you list the “or else!” clause! That is, if it’s x days late, there’s a late fee; if it goes beyond xx days, your belongings will be packed and put on the porch for you. (And make sure that that’s legal in your state, first.) But if someone’s not paying the rent he or she owes, you want to be able to come up with more than just “your rent is late”; your renter is probably going to be aware of that, you need to have consequences to that lateness spelled out. In fact, you want to have consequences spelled out to any behaviour you want to avoid – if dishes ARE left in the sink, you lose kitchen privileges for a week. Enjoy paying for those meals away from the house! So figure out what the consequences are for the actions that you don’t want that wouldn’t necessarily cause the lease to be broken. You also want to consider what those actions might be, as well; illegal drug use might be high on the list of lease-breaking activities.
7. For anyone with a child in the house renting to someone, it’s common enough these days for people to have to get police clearance to be around children – the guy who fixes the wiring at a school has to have that kind of clearance, adults who volunteer for Little League coaching; anyone who’s going to live in your house with your family can fill out that paperwork, too.
8. If you have the room in your house you may want to consider providing your renter with his/her own sitting room. This is a good solution if you have more than one room available, and would prefer not to have your own living room occupied by someone else (that “invisible tenant” as described in an earlier post). If you prefer your tenant less, rather than more, visible, make it easier for the tenant by providing an area other than the room in which he or she sleeps. Obviously, it’s not always possible, it’s not even always necessary or desirable, but different people have different privacy requirements. It could make a difference, too, in what you are charging; if you have two rooms, do you want two roommates? Do you want only one roommate? Do you want a tenant, rather than a roommate – that is, someone as invisible as possible? Offering someone the chance to rent two rooms – or including it in the rental price, for your privacy’s sake – may go a long way to help ensure your privacy and that of your tenant.
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