Author Topic: Renting out a Room (live-in landlord)  (Read 10609 times)

nirvines88

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Renting out a Room (live-in landlord)
« on: November 16, 2014, 06:43:41 AM »
I am buying a house soon that has 3 bedrooms and was thinking about trying to rent out one of the spare rooms to help pay down the mortgage more quickly.  Has anyone else done this? 

Outside of friends as potential roommates, what are good ways to find normal and reliable roommates?  Craigslist?
Any tips on performing background checks? 
Tips on setting up lease documents?
The best way to determine the going rent rates for the area?  Zillow? 
Tax consequences? (looking into IRS pubs later today)
Horror stories?
General tips, etc.

Thanks!

Malaysia41

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Re: Renting out a Room (live-in landlord)
« Reply #1 on: November 16, 2014, 06:49:33 AM »
I rented a room to a friend's colleague - they both worked at Microsoft in SF bay area.  It was a good experience, because she paid on time and she loaned me lots of great books like West With the Night by Beryl Markham. 

So if I were to look for a roommate I may consider getting the word out at a friend's business (I'd avoid renting to someone I work with).   See if you can get on their internal bulletin board, electronic or otherwise. 

Of course, just like craigslist, there's always the risk you'll find someone crazy - but if your friend knows them at all they can help you vet the applicants. 

etselec

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Re: Renting out a Room (live-in landlord)
« Reply #2 on: November 16, 2014, 09:19:06 AM »
As with any roommate situation, I think a lot of problems can be avoided by vetting people thoroughly - including for compatibility. Sit down and think through what's important to you in your living space, including standards for cleanliness, noise, guests, food, etc. Meet with a prospective roomie and talk through these things to figure out if you're a good match. Of course, it doesn't remove the possibility of misunderstandings and problems, but if you can set clear expectations up front you're more likely to find someone who's a good match.

Must_Stash

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Re: Renting out a Room (live-in landlord)
« Reply #3 on: November 16, 2014, 01:06:52 PM »
Use Transunion Smart move or a similar service.  Use Craigslist.  Describe your lifestyle; include general schedule, cleaning habits, degree of sociability.  Have a month-to-month and a room-mates' agreement.  Specify anything like quiet hours, parking, responsibility for cleaning, pets, smoking. If people balk, that's for the best.

I have a 3-bed and two great room-mates.  One does all the lawn work and the other shares cleaning responsibilities for rent reduction.

thedayisbrave

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Re: Renting out a Room (live-in landlord)
« Reply #4 on: November 16, 2014, 02:09:18 PM »
This is what I've been doing since 2011 and plan to continue doing (house hacking) until I get married.

I've rented to both friends and random people off Craigslist.  I generally am pretty good at judging character so I can usually tell if someone's being sneaky with me.  The friend I roomed with -- great, no issues.  We have lots of similar interests so we hung out all the time.  The two randos off Craigslist - were both close to my age, students at the time, very forthcoming about their financial resources etc.  It turned out well for me and since I have continued to rent to students through my network.  I no longer live at this first property but am self-managing.

I'm a stickler for good grammar on Craigslist responses.  If I put up an ad and they respond with two or three words, then I just don't bother.  However, if they take the time to craft a response (doesn't have to be long, just show some effort) then I'll respond and continue the conversation.  You just have to be diligent, but it can be done.

I signed leases with everyone. 

Villanelle

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Re: Renting out a Room (live-in landlord)
« Reply #5 on: November 16, 2014, 02:19:14 PM »
If you are near a university, see if you can find the office that deal with foreign students.  I know several people who have made great money renting to international students. Of course, your place is likely to be vacant during the summer, but both of my friends said that they rent they got for about 9 months was the same as they would have made for 12 months outside these programs.

And they got a couple months off from roommating, less wear and tear, etc. 

Static Void

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Re: Renting out a Room (live-in landlord)
« Reply #6 on: November 16, 2014, 03:18:22 PM »
If you are near a university,

I'll second that. We've come to prefer students as tenants. They usually have a financial plan in place and have worked out the costs. They're medium-term but ultimately temporary. They travel pretty light (we often provide their furniture, not always). They won't resent you for being a successful landowner whilst they are still peasants.

Get the NOLO books for landlords & tenants. (I encourage our tenants to read both, as well.)

One interesting tidbit -- When renting out a full unit, you need to scrupulous in your selection criteria. A desperate candidate could sue for the right to rent from you! (Seems like a bad idea, but people do.) Renting out a room in your own home, you can be more arbitrary.

Tips.

Be very explicit about what the rules of the spaces are, what areas are ok to use, not ok to use, and specifically theirs (with 24 hour entry notice).
Give them a specific cabinet in the kitchen.
I've found grad students are better about turning off the darn lights and locking the door when they go out... :D

homehandymum

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Re: Renting out a Room (live-in landlord)
« Reply #7 on: November 17, 2014, 12:48:24 AM »
Tips.

Be very explicit about what the rules of the spaces are, what areas are ok to use, not ok to use, and specifically theirs (with 24 hour entry notice).
Give them a specific cabinet in the kitchen.
I've found grad students are better about turning off the darn lights and locking the door when they go out... :D

Oh those are good tips! We're planning on doing this after Christmas (academic year in this part of the world matches the calendar year).  We've got a young friend of a friend lined up, hopefully, but that's not locked in yet.  If he decides to go elsewhere, we'll hopefully get someone through a couple of student activity contacts that we have.

Check your local state legislature, but for us, because we are living in the house, we are not covered by the usual tenant/landlord legislation (although we could opt in if we both chose).  This means that we have a lot more flexibility regarding selection, but also things like lease terminations etc. 

I still plan to draw up an agreement.  I quite like the look of this one as a starting point, which uses the terms 'Head Tenant' and 'Flatmate' (presumably so it can cover subleasing arrangements), but we'll probably use 'Landlord' and 'Flatmate'
http://www.dbh.govt.nz/UserFiles/File/Publications/Tenancy/pdf/flat-or-house-sharing-agreement.pdf

We also won't be paying taxes on it, since we will fall below our IRD's threshold of what it considers to be 'income' (2 tenants and over a certain dollar amount required).

richschmidt

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Re: Renting out a Room (live-in landlord)
« Reply #8 on: November 17, 2014, 01:10:54 AM »
Zillow is awful for setting rent rates here. I always rely on Craigslist. Just browse the ads for properties similar to yours to see what the range is. Works for me.

Accent

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Re: Renting out a Room (live-in landlord)
« Reply #9 on: November 17, 2014, 11:55:13 AM »
I did this, renting out two bedrooms in my house for more than three years until I got married in July. I had several different tenants, a mixture of friends and people off Craigslist. No horror stories, everything worked out well and I think it helped being the owner of the house as it was easier to set expectations and rules and have them respected (vs. renting and living with roommates).

I used Craigslist to set the rates for the rooms, and also just asked around what other people are paying. Start on the high end of the range and if you aren't getting any responses lower it after a week. Also, be sure to meet with potential tenants beforehand in person and discuss the living situation, as well as running a background check. I agree that it's important to have expectations clearly spelled out in a lease, and that having a month-to-month gives you some flexibility to end a bad situation.

gimp

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Re: Renting out a Room (live-in landlord)
« Reply #10 on: November 17, 2014, 02:55:22 PM »
From the other side of the aisle, let me tell you my craigslist experience as a renter of rooms. In short, no issues at all.

Here's what I look for, as a renter:

- Excellent grammar. If u typ lik dis, I ignore your email.
- Good responsiveness and conversation. A day or two is fine, though I prefer responses within several hours; and I expect the person to answer all of my questions and ask their own.
- Good photos. If you have no photos or a single grainy photo of the house, I don't immediately discount you but I press for more photos. There are a lot of scams where someone "rents" a house they don't actually own.
- Ability to set up a meet-and-greet fairly quickly.
- That the deal and the person "smell" good, so to speak.

As a landlord, you should look for pretty much the same exact things, less photos. Good grammar, reasonable and understanding, responds on time, and so on.

As a renter, my spiel when posting a "room wanted" ad was pretty much: Hi, single young male adult, college kid / working on coop at [big company everyone knows], don't smoke / do drugs, am quiet, like to do nerd stuff and go hiking (gotta make it a little bit personalized!), here's a nice photo of me hiking (so you see I'm a real person, or at least a face to remember, instead of one of the faceless masses.)
« Last Edit: November 17, 2014, 02:57:51 PM by gimp »

electriceagle

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Re: Renting out a Room (live-in landlord)
« Reply #11 on: November 19, 2014, 07:40:23 PM »
How well renting rooms works depends quite heavily on the housing market in your city. If you are in NY, SF or a college town, lots of reasonable people will want to rent a room in order to bring their rent down from $2k to $700.

If you are in a cheap part of the midwest, you might not have the same tenant market. The pool of people who seek a roommate situation to bring their rent down from $700 to $300 is different.

Screening is important. Since you will be living with the person, you can screen based on how they act and smell rather than just clearly identifiable traits such as income and presence/absence of prior evictions.

You should check references; when you do, remember to verify that the number you are calling actually belongs to the previous landlord. Anyone can ask a friend to be a pretend reference on their behalf. Ask open-ended questions and let people talk.

You should also check for criminal records (decide what is allowable to you) and previous evictions using one of the various services that does this.

nirvines88

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Re: Renting out a Room (live-in landlord)
« Reply #12 on: November 20, 2014, 03:30:28 PM »
Great advice so far, keep it coming!  I'll post a draft Craigslist ad in the near future and perhaps y'all can give me some feedback.

Any advice on what screening services to use?  Also, would you charge the potential tenant for their own screening costs?

Also, a few people have mentioned short-term leases.  I think this would be a great option in case you need to get someone out of there.  Any downsides (other than vacancy)?  As a live in landlord, I'm curious if I could just kick someone out (once again, I'll need to do some digging on tenant laws in my state...).

gimp

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Re: Renting out a Room (live-in landlord)
« Reply #13 on: November 20, 2014, 06:54:14 PM »
To kick someone out, you almost always need a 30-day notice. Immediate would be very rare (and would usually be coupled with involving cops.) Of course romantic relationships are a completely different bucket of worms...

I don't think I've ever paid a fee to be screened as a room renter. I don't think I've ever been screened, to be honest, though I was asked to provide references once (who were indeed called/emailed.) I've also been asked to provide proof of income for apartments, which you might ask. (I've also name-dropped a well-known employer of people stereotypically known to keep to themselves, hooray engineering.) I'm sure I've been googled, which is great, because my name is 1) unique, 2) very google-able since I maintain online presence under it, and 3) has respectable results. Your mileage will certainly vary. You might be able to find the person on facebook/twitter/etc (see if they're posting about stupid shit), linkedin (see if they look like they have a career), the local mug shot registry or sex offender list or whatever, and so on. Google is your friend.

If you want to really screen them, there was recently a link here for a $5 off $35 regular screening procedure that people use. You'd probably have to eat the cost.

As a renter, I wouldn't pay a screening fee to a guy with a house, because I'd suspect he was just collecting "screening fees" and I'd never hear back after throwing $35 or whatever down that particular hole.

Oh, and check out their car. If it's full of mcdick's and burger beetus wrappers and cigarette ashes, that's a bad sign. If it's fairly clean, then chances are they're fairly clean.
« Last Edit: November 20, 2014, 06:57:17 PM by gimp »

clarkfan1979

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Re: Renting out a Room (live-in landlord)
« Reply #14 on: November 22, 2014, 09:15:49 PM »
I did this for four years in grad school and it worked out great. I charged a little less and was picky. I would suggest meeting with everyone face to face before committing. This one guy was great over the phone but it was different meeting in person. I denied him because he was going to school part-time and working part-time. Taking 2 classes at the community college and working about 15 hours a week. When I told him that we were looking for other full-time students, he insisted that his two classes counted as full-time. It was kind of weird.

neo von retorch

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Re: Renting out a Room (live-in landlord)
« Reply #15 on: November 24, 2014, 02:09:07 PM »
This is what I've been doing since 2011 and plan to continue doing (house hacking) until I get married.

I've rented to both friends and random people off Craigslist.  I generally am pretty good at judging character so I can usually tell if someone's being sneaky with me.  The friend I roomed with -- great, no issues.  We have lots of similar interests so we hung out all the time.  The two randos off Craigslist - were both close to my age, students at the time, very forthcoming about their financial resources etc.  It turned out well for me and since I have continued to rent to students through my network.  I no longer live at this first property but am self-managing.

I'm a stickler for good grammar on Craigslist responses.  If I put up an ad and they respond with two or three words, then I just don't bother.  However, if they take the time to craft a response (doesn't have to be long, just show some effort) then I'll respond and continue the conversation.  You just have to be diligent, but it can be done.

I signed leases with everyone.

This sounds like me, almost exactly. Since 2007 I've been renting out my 2 extra rooms. Initially was either someone I knew or a friend of a friend. Once I ran out of those, I listed on Craigslist, and the most coherent replies got the most attention. I've had an excellent roommate the past 3 years. Recently moved out and rented the last of the rooms. I must say, though, that replacing vacancies now that I live 90 minutes away is a lot trickier! I'd hate to drive 3 hours to meet with someone that didn't work out. For the moment, though, an existing (very trusted) tenant is meeting potentials for me!

brycedoula

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Re: Renting out a Room (live-in landlord)
« Reply #16 on: November 26, 2014, 11:47:28 AM »
My husband and I do this at our house too(he did it before I moved in as well).

One rule/clause we have in the lease agreement is in regards to boyfriends/girlfriends/sleepovers/whatever.

We are very clear in stating that the room rented is for 1 person ONLY(the tenant). Of course the tenant is an adult, but if BF is staying over > 1 or 2 times per week then they either need to a) be added to the lease & consequently the monthly rent is increased OR b) the original tenant needs to leave. If another adult is always over & cooking or showering or watching TV or hogging the kitchen space then it's not fair to the others (or you!) that they aren't paying their fair share.

I realise this isn't always easy to police/enforce, but IMO it's easier to have such rules at the start of the lease than to try & change them later...

Paul der Krake

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Re: Renting out a Room (live-in landlord)
« Reply #17 on: November 26, 2014, 12:08:39 PM »
My last roommate arrangement was like that. A postgrad starting a long programme, she knew she was going to be in the area for years, so she bought a 4 bedroom house and rented out 3 of them. It has worked really well for her, she's a great person but in my humble opinion, way too trusting for skipping the background/credit checks altogether.

One of the biggest perks however, is that since it's a roommate arrangement, you don't have to be blind and have to rent to someone that gives you a bad vibe just because he or she meets all of the criterions.

nirvines88

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Re: Renting out a Room (live-in landlord)
« Reply #18 on: November 27, 2014, 08:45:31 AM »
My husband and I do this at our house too(he did it before I moved in as well).

One rule/clause we have in the lease agreement is in regards to boyfriends/girlfriends/sleepovers/whatever.

We are very clear in stating that the room rented is for 1 person ONLY(the tenant). Of course the tenant is an adult, but if BF is staying over > 1 or 2 times per week then they either need to a) be added to the lease & consequently the monthly rent is increased OR b) the original tenant needs to leave. If another adult is always over & cooking or showering or watching TV or hogging the kitchen space then it's not fair to the others (or you!) that they aren't paying their fair share.

I realise this isn't always easy to police/enforce, but IMO it's easier to have such rules at the start of the lease than to try & change them later...

An excellent suggestion, didn't think of that.

One of the biggest perks however, is that since it's a roommate arrangement, you don't have to be blind and have to rent to someone that gives you a bad vibe just because he or she meets all of the criterions.

Legally speaking?!  I've heard horror stories about landlords that get in hot water for turning down tenants that meet all listed criterions.  Not a problem since it's a roommate situation?  If so, sweet!

Paul der Krake

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Re: Renting out a Room (live-in landlord)
« Reply #19 on: November 27, 2014, 05:31:47 PM »
One of the biggest perks however, is that since it's a roommate arrangement, you don't have to be blind and have to rent to someone that gives you a bad vibe just because he or she meets all of the criterions.

Legally speaking?!  I've heard horror stories about landlords that get in hot water for turning down tenants that meet all listed criterions.  Not a problem since it's a roommate situation?  If so, sweet!
[obligatory I-am-not-a-lawyer-please-verify-this-info-for-your-jurisdiction-blabla-and-don't-sue-me statement]

Yes, you have a lot more wiggle room for shared housing: craigslist has a decent FAQ covering this over here:
http://www.craigslist.org/about/FHA

nirvines88

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Re: Renting out a Room (live-in landlord)
« Reply #20 on: December 07, 2014, 08:03:03 AM »
Edit
« Last Edit: August 14, 2017, 05:41:00 PM by nirvines88 »

Paul der Krake

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Re: Renting out a Room (live-in landlord)
« Reply #21 on: December 07, 2014, 08:21:36 AM »
Look good- I would apply to live there. I'm assuming you left out the location and proximity to other things for privacy reasons?

Otherwise, I don't think putting the legal stuff at the top of the ad is necessary, and it could be off-putting to some. YMMV.

nirvines88

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Re: Renting out a Room (live-in landlord)
« Reply #22 on: December 07, 2014, 10:01:56 AM »
Look good- I would apply to live there. I'm assuming you left out the location and proximity to other things for privacy reasons?

Otherwise, I don't think putting the legal stuff at the top of the ad is necessary, and it could be off-putting to some. YMMV.

Correct.  I bragged about how close the home is to nearby malls and interstates at the top of the post.

Okay, I'll remove the legal stuff.  Should I keep the note that it is a shared living arrangement?  NC's laws are pretty clear that it's discrimination if you say you want young/professional roommates and singles UNLESS it's a shared living arrangement, which I wanted to make clear!

Paul der Krake

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Re: Renting out a Room (live-in landlord)
« Reply #23 on: December 07, 2014, 12:07:14 PM »
Yes, leave that in there or you will get people trolling listings for illegal ads contact you.

LordSquidworth

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Re: Renting out a Room (live-in landlord)
« Reply #24 on: March 02, 2015, 09:09:16 PM »
I rent out the extra rooms in a large home I currently live in.

I kicked out a woman in December.

Three weeks ago I got served with a PFA (Protection From Abuse)...

Apparently I sit outside her work. Threaten her. Stalk her. Etc.

Haven't spoken to or seen her since Dec 10th.

Did you know you can go to a judge and get a PFA on someone without showing any proof you live there, and have them removed from the property? She goofed on the paperwork and the judge didn't fully sign off on what she wanted, but had she not included a particular sentence he would have signed a document saying I couldn't be in my own home. If she had come on the property I would have to stand out on the sidewalk and call the cops to arrest her for trespassing. If I went on the property they'd arrest me.

This was all out of spite.

** This matter's been closed. Lawyer took care of it. **

Roots&Wings

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Re: Renting out a Room (live-in landlord)
« Reply #25 on: September 06, 2015, 01:17:28 PM »
OP, were you able to successfully rent out a room? Any updates on how this is going for you?