Advice for renting out rooms in house requested!

[Aushin]

We're going to start renting out two rooms in our house (my sister will move into my mother's room, I will relocate to a mostly-unused room we call the "game room". 

Landlords, I was just wondering what kinds of things I should know beforehand.  What do lease agreements usually look like?  Do I need a lawyer to write one?  What are unreasonable requests to ask of the tenant? 

I have zero experience in renting things out, let alone living with people while I rent to them.  But I'm getting interest from a craigslist ad so I need to educate myself sooner rather than later. 

[kisserofsinners]

There are plenty of generic lease forms online. To me the biggest thing i look for is what are they paying for rent now? If it's much less then what i'm asking, that's a flag.

The "rules" are something you need to figure out. Are you really up tight about things being moved, used without permission, or generally want things "just so". If so, find someone who's laid back and won't really care. If you're laid back it doesn't really matter. My guess is you're more controlling otherwise you would be asking, but that's totally an assumption.

[totoro]

I've always much preferred renting out a separate self-contained space.  Agreements are standard.  Choosing the right person is key when you are sharing space.

[freelancerNfulltimer]

How big is your house and how many bathrooms? It sounds like you already have three people living there. Adding two more people would make five correct?

If the house isn't large that's a lot of people sharing a house. You might find that you'll have to charge less to be competitive to make up for the lack of space, privacy and bathrooms. The type of people that can afford the lower price and are willing to put up with such a situation are probably less than ideal individuals.

Make sure you get first and last month's the day they move if not before. Get a back-ground check. Get a credit check. You can find leases online at websites like:

http://www.legaldocs.com/lease-s.htm

Make sure you stipulate in the lease what is covered. Normally that means quiet enjoyment of common areas (living room, kitchen etc...). How are you going to deal with tenants who don't take the trash up, never do their dishes, camp in front of the tv on the living room couch for hours on end, noise, their guests coming and going, them using and breaking your things? All this can and will happen. Think even to the point of running the dryer (I can only assume with a load of rocks) at midnight which happens to be outside your bedroom and keeps you up at night from the racket?

I rented out two rooms in my condo for years. I probably had 10-15 roommates. I don't even remember them all. Not one of them every vacuumed, mopped or cleaned out the microwave. I was almost always the only one who took the trash to the dumpster.  For me it meant my mortgage was pretty much always covered and I just had utilities and condo fees so I grinned and beared it. But it wasn't exactly easy money.

Oh yeah... one other thing. I ended up putting deadbolts on ALL the bedroom doors. My nice TV was in my bedroom. One of my tenant's boyfriends stole my laptop out of the living room where I'd left it over night. After that deadbolt went in and everything of value was locked away. Didn't matter if I went to the car I locked the room. Each tenant got a key for their door when they moved in and they got their deposit back once I got the keys back in my hand.

[Aushin]

How big is your house and how many bathrooms? It sounds like you already have three people living there. Adding two more people would make five correct?

If the house isn't large that's a lot of people sharing a house. You might find that you'll have to charge less to be competitive to make up for the lack of space, privacy and bathrooms. The type of people that can afford the lower price and are willing to put up with such a situation are probably less than ideal individuals.

Make sure you get first and last month's the day they move if not before. Get a back-ground check. Get a credit check. You can find leases online at websites like:

http://www.legaldocs.com/lease-s.htm

Make sure you stipulate in the lease what is covered. Normally that means quiet enjoyment of common areas (living room, kitchen etc...). How are you going to deal with tenants who don't take the trash up, never do their dishes, camp in front of the tv on the living room couch for hours on end, noise, their guests coming and going, them using and breaking your things? All this can and will happen. Think even to the point of running the dryer (I can only assume with a load of rocks) at midnight which happens to be outside your bedroom and keeps you up at night from the racket?

I rented out two rooms in my condo for years. I probably had 10-15 roommates. I don't even remember them all. Not one of them every vacuumed, mopped or cleaned out the microwave. I was almost always the only one who took the trash to the dumpster.  For me it meant my mortgage was pretty much always covered and I just had utilities and condo fees so I grinned and beared it. But it wasn't exactly easy money.

Oh yeah... one other thing. I ended up putting deadbolts on ALL the bedroom doors. My nice TV was in my bedroom. One of my tenant's boyfriends stole my laptop out of the living room where I'd left it over night. After that deadbolt went in and everything of value was locked away. Didn't matter if I went to the car I locked the room. Each tenant got a key for their door when they moved in and they got their deposit back once I got the keys back in my hand.

This is exactly the kind of post I needed.  A lot of stuff in there I hadn't even thought of.  But yeah, we lived as a family of four there for a long while.  It's 3 bed 2 bath.  When home, I don't typically leave my room.  My sister and I are rarely there.  I don't expect that prospective tenants would feel cramped or I wouldn't try to rent both rooms.

I had thought of padlocking our rooms though.  And I sort of expected people to be messy by default even though we keep a very neat house. 

[freelancerNfulltimer]

Typically boarders do not want to share bathrooms. You will have one bathroom for your family and another bathroom for the tenant. Unless you're renting a room to a couple I don't think you're going to be able to get two tenants. I would rent out one bedroom and have it come with a designated bathroom. I'm assuming the one bathroom is attached to a master, and the other is in a hallway someplace. The hallway bathroom would be the tenant's  bathroom exclusively. You would need to all start sharing the master bath so as to keep the other one exclusively for the tenant.

You need to consolidate kitchen supplied and designate two or three cabinets for the tenants use. I recommend requiring that they use their own dishes. If there is a pantry you need to free up two shelves for them and explain that those are their shelves. Same with the fridge. You need to make room for them in the fridge. Tenants will shop for a month and take over the whole fridge and all the storage space. You may discover they started eating your food. I recommend a small apartment sized fridge to keep in your room if this becomes an issue.

Asking tenants to change behavior is a waste of time. Telling them to please only shop for one weeks worth of food will get them to change behavior once and then go right back to the way they were doing it before. Basically you're going to be walking a line of what can I put up with for X amount of dollars.

Good luck.

[Mattamatics]

I have not found it difficult to have boarders (roommates) share a bathroom (as long as you limit the number of people using a bathroom to three). I suppose it depends on who you are renting to – I’ve rented the rooms out in my house traditionally to students or people transitioning from students to professional life (so people generally <35). If you're renting to students (or recent students) I don't think you'll have any problems getting them to share a bathroom.

I would stress the importance of setting expectations, I had one roommate move in that always wanted the house at 72 in the summer. (The previous summer I had turned on the AC once – for a party) Thankfully he was a reasonable person so we simply benchmarked the electricity using the May bill and he would pay the difference (I usually rounded down by $5 or $10 just to generate goodwill – which he appreciated).  Also if your internet currently has data restrictions (ie 60GB a month) it can be a problem - I had to explain to one tenant that skyping with Iran infact does use up bandwidth/data - we had to google it for him to believe me... Ater two months of $60+ in additional fees I simply switched to an unlimited plan (somewhat harder to find in Canada than the US I believe)

I agree with freelancerNfulltimer about fridge/freezer situation – In my case I simply purchased a small chest freezer (>$200) that was designated as mine and one other tenant and the other tenants then had full use of the fridge freezer. You could also easily purchase another fridge and have one be yours and one be your tenants.
When you’re showing them the house be sure to chat them up and at the end of the showing be blunt about what you’re looking for in a roommate (since you’ll be living with them after all). Also remember to consider parking (we have to do tandem parking at my place so I usually give preference to people without vehicles)

Also when doing your taxes be aware of the (potential) tax implications. In Canada if you rent out a portion of your house and then claim CCA (amortization) to reduce your taxable income for the year it can impact the way capital gains are treated on your house (normally primary residences in Canada do not incur capital gains) -so you simply don’t claim CCA. Same thing goes for if you were to rent out over 50% of your home (in your case doesn’t sound like a problem).

If you’re a laid back person having a roommate(s) to help supplement your mortgage is a great plan in my opinion, if you’re high strung it’s a terrible idea. I’ve had between 1-4 since purchasing my own home (5/6 bedroom 2 bath – former student rental house) and never had any significant issues at all (2 of the tenants were found on Kijiji, and one came with the house when I purchased it).