Author Topic: Setting a rental rate (family, house not well designed to have a tenant)  (Read 2020 times)

FIRE47

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I am in a bit of a dilemna here, long story short we decided to rent a room to my DW's aunt - we have way more house than we need and it seemed like a good idea to make use of the space as well as do somewhat of a good deed. The aunt is a pleasant person and will not be any bother as far as noise, cleanliness etc. She will help cook and clean as a member of the household as far as I can tell. I initially thought it was supposed to be for a few months, so did not really care to negotiate or ask for much (was just going to accept whatever was offered without any concerns), unfortunately the details have changed and it has shifted to a long term situation and I need an unbiased opinion to help me determine a fair $dollar amount.

I am going to spare the details and drama of what happened, miscommunication by DW etc and get to the point, she is now looking to stay for up to 2 years.

Because of the initial details we basically just said to give us whatever you feel is fair (The rate that was offered is essentially to take the bachelor apartment rate in your city and divide it by 3.5-4.5, I would call it more of a courtesy gift than a rent at this point.)

From their perspective the layout is not at all designed for a tenant. There is no separate entrance, kitchen, they do not have a washroom on their floor and the bedroom is right off of our basement living room (which means in my mind I will be surrendering my main living room most nights). They are also only going to be staying 4 nights a week and commuting back and forth to their family Friday - Sunday as they will not all be moving here for the 2 years for personal reasons. Since we are getting into the $ and cents from a rent perspective obviously utilities, WIFI and premium cable are provided.

I am not looking to make market rent off of this, as this was supposed to just be a bit of a favour, however I just bought this place and I will be damned if I will lose enjoyment of my property for 2 years (see above re: bad layout) to subsidize someone else's bank account. Also keep in mind there is no component of financial need on any side of this negotiation, although us being 27 and her being a late 40s professional who just took a big full-time promotion (reason for coming in first place) I would not be surprised if her income is nearing both of ours combined.

I gave some extra details but I don't really need anyone to comment on who is right or who is wrong just on how you would decide a fair amount taking all the factors into consideration including that it is family. Assume that a bad bachelor apartment goes for $700/month and a mediocre 1 bedroom for $850 in the local area with no utilities included.



« Last Edit: December 04, 2017, 09:44:42 AM by FIRE47 »

plog

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #1 on: December 04, 2017, 10:30:49 AM »
Quote
I gave some extra details but I don't really need anyone to comment on who is right or who is wrong just on how you would decide a fair amount taking all the factors into consideration including that it is family

Ha ha, love these posts...long emotion filled story scattered with factual, pertinent details and a lot of other details to support the emotional state, then a plea to ignore the emotion and situational factors and give just hard data advice.  I'll step into your bear trap.

You've already found out what the economic fair price is, so seems like the case is closed.  Of course, with all those personal factors we aren't suppose to consider this doesn't seem "fair" to you personally for all the things you will be missing out on.  So, please define "fair".


FIRE47

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #2 on: December 04, 2017, 10:33:52 AM »
Quote
I gave some extra details but I don't really need anyone to comment on who is right or who is wrong just on how you would decide a fair amount taking all the factors into consideration including that it is family

Ha ha, love these posts...long emotion filled story scattered with factual, pertinent details and a lot of other details to support the emotional state, then a plea to ignore the emotion and situational factors and give just hard data advice.  I'll step into your bear trap.

You've already found out what the economic fair price is, so seems like the case is closed.  Of course, with all those personal factors we aren't suppose to consider this doesn't seem "fair" to you personally for all the things you will be missing out on.  So, please define "fair".

I can already tell you don't want to engage with this post so not sure why I am biting, but how so? A bachelor apartment to a stranger is not the same as a poorly laid out unit to a family member. In addition is this unit closer to bachelor or a 1 bedroom or is it something else entirely? I don't know but I'm sure there are some landlords or tenants on here with experience.

The factors were there to consider in the amount, I just don't care who is morally the most right or most wrong as I'm sure everyone here will have a different answer on that. The point is I don't need anyone to agree with my emotional state to make me feel justified, for all I know I am wrong - I just want help with the $ amount.

"Fair" would be defined as amount that you personally would consider "fair", through gathering multiple outside opinions on what they would consider "fair" , I can therefore help to situate what a reasonable response/amount.


« Last Edit: December 04, 2017, 10:48:03 AM by FIRE47 »

beltim

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #3 on: December 04, 2017, 10:48:05 AM »
I gave some extra details but I don't really need anyone to comment on who is right or who is wrong just on how you would decide a fair amount taking all the factors into consideration including that it is family. Assume that a bad bachelor apartment goes for $700/month and a mediocre 1 bedroom for $850 in the local area with no utilities included.

You can probably look online for what a room in a house rents for in your area.  That should be comparable to what you should charge, minus a bit for a family discount.

If that's not available, what's a mediocre 2 bedroom go for?  Something like half of a 2 bedroom apartment rent, minus $100 seems fair to me considering on the one hand it's poorly laid out and she has to share the kitchen and washroom, and on the other hand she gets utilities included.

Catbert

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #4 on: December 04, 2017, 10:56:14 AM »
I gave some extra details but I don't really need anyone to comment on who is right or who is wrong just on how you would decide a fair amount taking all the factors into consideration including that it is family. Assume that a bad bachelor apartment goes for $700/month and a mediocre 1 bedroom for $850 in the local area with no utilities included.

You can probably look online for what a room in a house rents for in your area.  That should be comparable to what you should charge, minus a bit for a family discount.

If that's not available, what's a mediocre 2 bedroom go for?  Something like half of a 2 bedroom apartment rent, minus $100 seems fair to me considering on the one hand it's poorly laid out and she has to share the kitchen and washroom, and on the other hand she gets utilities included.

Yep, this seems about right. 

historienne

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #5 on: December 04, 2017, 10:57:59 AM »
I would do something around $400.  I've been in a similar situation - we rented out the fifth bedroom in our family house to a friend who commuted into town for the workweek.  We wouldn't have rented it to a stranger, so the money was a pure bonus to our household economy.   Given that, I'd prefer to lowball the rent, in order to manage the tenant's expectations.  Even if she's a great tenant, something's going to come up over the course of two years.  If she feels like you're doing her a favor, I imagine she'll be less likely to ask you to (for example) keep your kids quiet before 8 am.  To me, that would be more important than getting the highest possible rent.  It also may be the best choice from a pure financial perspective - if she stays for two years at $400/month, you'll get more money than if she stays for a year at $600 then decides to look elsewhere.

Another Reader

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #6 on: December 04, 2017, 11:02:10 AM »
If she is helping with the cooking and cleaning, that needs to be considered.  Also if she is sharing meals.  I would start with a list of rooms for rent and adjust up or down for amenities and the work and food contributions. Sorry that DW did not communicate the entire story to you.

FIRE47

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #7 on: December 04, 2017, 02:40:49 PM »
It seems most of the responses are leading me to the same rough amount which is what my gut was telling me initially. Unfortunately that is at least double the current amount at the low end so we will see how it goes.


lbmustache

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #8 on: December 04, 2017, 05:05:02 PM »
It seems most of the responses are leading me to the same rough amount which is what my gut was telling me initially. Unfortunately that is at least double the current amount at the low end so we will see how it goes.

Yes, but you also mention a loss of convenience to you, the fact that you're "subsidizing" her bank account, and her income seems high enough to afford the increase. It's also a favor you are offering to her. With utilities and all included, I personally feel $400-$500 is a fair amount for a bedroom and shared usage of a bathroom and a kitchen.

Maybe I'm delusional living in a HCOL, you're easily looking at $800+ per person to split a 2 bed/1 bath ($1600+) with a roommate around here.

Goldielocks

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #9 on: December 05, 2017, 01:29:06 AM »
 Based on the emotion, it seems like you would rather have your space and privacy than the money.  If so, just say that she can only stay for x months, for whatever rent she chooses, but then will have to rent a room from someone else.

OR if you desire the money...

Here, when bachelor suites were going for $650, non ideal single rooms were going for around $350. (I checked it out). These are single rooms with shared washrooms, lower level.   Your setup is better than most for the renter because she will have access to a fairly large shared home / kitchen / living areas.  It is worse in that the washroom is on another floor.  Good because she will be the only boarder with only a few others in the home.  This has pros and cons, but as family to you, the main cons should be minimized (feeling like a stranger / odd person out).

The poster who suggested $400, given local bachelors are $700 is about right if she is there most of the week, every week.   You could set it up as $20/night to a max of $400, min of $160...  too.
« Last Edit: December 05, 2017, 07:14:03 PM by Goldielocks »

Linea_Norway

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #10 on: December 05, 2017, 04:01:08 AM »
The cleaning and the cooking, is that is regularly done, can maybe lower the price to 50% of the bachelor apartment price. On the other hand, if cooking for your family means that she gets a free meal from ingredients paid by your income, this should not count as a reduction in price.

A tenant who gets access to someone's living room, WIFI and cable, in addition to a private room and shared kitchen and bathroom, I see that as a very good deal. When I used to rent rooms as a student I did not have access to an extra living room and had to pay for my own phone and TV license. I think this would compensate for a bad layout of the room. Offering 2/3 of the market price sounds in that case very generous and can be seen as the "family discount". If you think her cleaning saves you from hiring a cleaner, you might want to reduce to 50%. The 50% might also be reasonable of she only uses the room during the week and cannot claim it during a weekend.

kimmarg

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #11 on: December 05, 2017, 05:17:32 AM »
I know it's probably too late now, but my policy is with family "don't offer anything you wouldn't offer for free". That way any money is a bonus, and no hard feelings. I value family over $$

CindyBS

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #12 on: December 05, 2017, 06:42:30 AM »
If a nice, quiet pleasant person wanted to move into my house and cook and clean for us - I would probably pay them!  lol. 

If she is decent, respectful, helps out and you have no problem with her as a person, my $.02 is don't cheap out and demand a lot of rent.  Having a good relationship with a decent, honest family member goes a long way.  Right now you are 27 and she is in her 40's, but someday in the future everyone will age and she could be a huge help with dealing with any family problems or health issues with your DW's parents as they age.

The biggest issue is the miscommunication from the beginning and that is really an issue between you and your wife.  It seems incredibly rude to tell her to pay more money because you and your wife had not worked it out before she moved in.   


FIRE47

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #13 on: December 05, 2017, 07:51:22 AM »
If a nice, quiet pleasant person wanted to move into my house and cook and clean for us - I would probably pay them!  lol. 

If she is decent, respectful, helps out and you have no problem with her as a person, my $.02 is don't cheap out and demand a lot of rent.  Having a good relationship with a decent, honest family member goes a long way.  Right now you are 27 and she is in her 40's, but someday in the future everyone will age and she could be a huge help with dealing with any family problems or health issues with your DW's parents as they age.

The biggest issue is the miscommunication from the beginning and that is really an issue between you and your wife.  It seems incredibly rude to tell her to pay more money because you and your wife had not worked it out before she moved in.   

I think I described the situation incorrectly - I don't suspect anyone will be cooking and cleaning for us beyond pulling their own weight and not adding any additional work. She is just as busy as we are and we do not expect a maid.

And it isn't about "paying more" because of miscommunication, it's that it simply is not worth it to me to give up 1/3 of my property 4-5 days a week for such a low rate long-term unless someone is in desperate need, my doors are always open to family who need it. I am not looking to charge a full rate, however we have to meet in the middle. At this point given added utilities and consumption of various supplies and groceries, toiletries, coffee, milk, etc  I will be lucky to have $100 extra in my jeans at the end of each month. I will of course be polite and give as much notice as is needed but I will also not allow us to be taken advantage of for 2 years because my DW was too nice and I did not have all the facts. As it is now I am willing to accept the current situation for 3 months as being my mistake and it will be up to them if the rate is acceptable or they want to find another alternative.


I don't want to go down the argument over morals here because the thread will quickly descend down a rabbit hole but it could also be considered rude to offer an incredibly low amount and put the burden on your hosts to have to negotiate for more. Especially given the power dynamic involved being an older aunt to my DW.
« Last Edit: December 05, 2017, 08:06:23 AM by FIRE47 »

PoutineLover

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #14 on: December 05, 2017, 08:43:18 AM »
That is an inconvenience and I would probably not be happy about having to share my living space for 2 years so that someone else can live cheaply. Presumably she could afford a place, and you and your wife are doing her a big favour by letting her live with you below market rate. If you add up all the costs of your home (mortgage, property tax, utilities, wifi, etc.) and divide that by 3 does that give you a fair number? And if she eats with you, perhaps include groceries too? That's how I'd start, and then since she isn't there all week, maybe factor that in. On the bright side, you still have your weekends!

Goldielocks

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Re: Setting a rental rate (family, house not well designed to have a tenant)
« Reply #15 on: December 05, 2017, 07:18:30 PM »
I will of course be polite and give as much notice as is needed but I will also not allow us to be taken advantage of for 2 years because my DW was too nice and I did not have all the facts. As it is now I am willing to accept the current situation for 3 months as being my mistake and it will be up to them if the rate is acceptable or they want to find another alternative.



Just to clarify -- let your aunt know now about the rate change in 3 months.  Say many nice things about the aunt while you do it, apologize for any mis communication, etc, should make it go more smoothly.