Room mates seem to be financially rewarding on paper

[Bearded Man]

I've never had room mates, other than gf's who lived with me or stayed the night, etc. That said, I keep exploring the idea of room mates. One of my rentals that I used to live in is ideal for it.

-Large rambler, with the other bedrooms on the other side of the house with their own bathroom. Two living rooms, one of which is a seperate living area that I can close the french doors to. The master bedroom has an in suite 3/4 bath, and a seperate living area with it's own fireplace, french doors, and a sliding glass door to the large deck (there's another fireplace in the other living room).

-I bought the house at the bottom of the market and got a killer interest rate with almost no money down. My mortgage payment is so small, that after principal and taxes, I'm paying LESS than $500 a month to live there, and $300 of that is taxes and insurance. I could get get $1,050 a month for the two rooms (one is slightly larger and has a walk in closet so I would charge $50 more than the other room) which would cover my post benefits house payment, utilities, internet and several hundred dollars worth of other expenses.

-The house has a large yard and I can legally have livestock (and did when I lived there) and garden my food for the most part.

-The house is walking distance to trains, buses, etc., and only a 30 minute drive to Seattle.

I'd still have other investments to live off of, including two dedicated rentals and some dividend stocks, but I can't help notice that with the right layout of a house, having a couple of room mates drastically helps on the path of FI. As seen in the case above, it basically pays my cost of housing, utilities, internet, cell phone, food, and a few other things. To the point that I'd only need $400 a month at the high end from my investments to pay for anything else.

Yes, I'm sure it is not as nice as living alone, but for the above benefits, I think if you screen carefully enough and they are cool people, it could be well worth it. At least worth a try. Plus in retirement, it would give me some people to occasionally go out with perhaps, or have a BBQ with, since I typically meet all my friends through work.

And if I needed/wanted to travel, there are still people there to look after things.

[lauraah]

I've been debating getting a roommate for months.  I have a 1000 square foot house with 2 beds 2 baths, so it would be a little cozy but perfectly doable.  There's no question that it's financially a wise move.  And I've had many positive roommate experiences in the past, but they were followed by one extremely negative one that has made me wary of roommates.  Of course, if it's my house and my rules and everything is month to month, hopefully I could quickly get rid of any terrible tenants.  Still, it's nice having *my* house, and I can't decide if $500 is worth giving that up and the risk of a bad roommate.

For you- with so much extra space, I'd recommend renting out one of the rooms and seeing how it goes.  If it's positive, maybe rent out the other.  If you hate it, well then you know.

[tjthebest]

Did you manage to get that steal of a property in King county? lucky dog.

[2Birds1Stone]

A good friend of mine does this in Syracuse NY. He got a decent job after graduating college and purchased a home 3 years ago.

He has had 2 roommates who pay him $500/month each since he purchased the home, they have effectively been paying down his mortgage for him.

[Bearded Man]

Did you manage to get that steal of a property in King county? lucky dog.

Yep. I know right!?!? No sense in even paying it off, doing so would save me about $200 a month but cost me about $600 a month in opportunity cost with the capital tied up. House was a once in a life time deal. I basically got it for half what it was worth at the peak of the market.

Oh, there's RV parking there too, so perhaps I could rent out the RV space. Not necessary but another option. I don't want to rent out every nook and cranny.

As someone else mentioned, I could start slow with just one RM, but I would charge higher rent and give them a dedicated bath. Ultimately though, although even just one room mate is a huge financialy reward for this house, I'm leaving money on the table, and having both rooms filled with hopefully help keep them in check, since the rooms have a shared wall. Did I mention their bath is on a seperate water heater? :-)

[HipGnosis]

I have a friend that bought a nice size house because she was in a relationship with a guy with a kid (and he had full custody).  The relationship didn't last and she now has 2 roommates. 
She checks out potential roommates quite well (pays for a credit check, etc.) and the only problems she had was one got transferred to a different city and one wanted a gf to spend some nights - which she was OK with but felt it was unfair to the other tenant as their rooms are adjacent.   
She is a home-body, which I think is a stabilizing factor.
But I don't think you can count on the average tenant to 'take care of things'.  But they can certainly call or text you and hopefully take initiative or directions to do damage control.

[Jersey Brett]

The right roommate is good.

The wrong one is VERY bad.

[Bearded Man]

Curious, I've heard alot of people mention that they don't allow overnight guests for their room mates. Should such a rule apply to me, as the owner, to be fair??? I mean I'm the owner and my room is all the way on the other side of the house, whereas theirs are right next to each other.

Also, do you cap, how many people they can have over at one time? Like 2 each? Thing is none of THOSE people have been through a background check, so....

Yet I would think to some extent people expect to be allowed to have a guest over once in a while. I dunno, this and the kitchen I think are the biggest problems to overcome, but I'm sure I will figure it out with some research.

[BigHaus89]

No overnight guests? What the hell?

That seems like way overstepping one's bounds and dictating intimate relationships, but that's just my opinion.

I have a split level house and rent out my downstairs bedrooms. They have their own bathroom, kitchen, and living room. It is basically a duplex situation and it has been the biggest game changer for my finances since I started it. I highly recommend it for pursing any financial goals you may have.

[Gone Fishing]

I would include a trial period in the agreement.  Most anyone can hold their shtuff together for a week or two, so I would suggest 60 days.

[Jack]

Oh, there's RV parking there too, so perhaps I could rent out the RV space. Not necessary but another option. I don't want to rent out every nook and cranny.

The really optimal move might be to buy a cheap RV, move into it yourself, and rent out the whole house.

[NoraLenderbee]

Having roommates is a great way to pay your mortgage, IF you can stand having roommates. A friend of mine did it a couple of times and came out way ahead. I would rather chew my own leg off than ever have roommates again, personally, but my friend liked the social aspect.

Caveats: You can have the same tenant problems you would if you didn't live there--late payers, etc. --plus normal roommate problems. The tenants will never care about your property as much as you do and they will not take good care of it. My friend could not get his roommates to wipe their feet, ever, and he did the lion's share of the cleaning.

As far as guests, figure out what you can live with. For example-- it's OK if someone's girlfriend stays over on the weekends, but not if she's there more nights than not. They can have friends over, but need to let you know if they want to monopolize the kitchen or living room for an evening. Out-of-town guests can stay for up to 2 weeks; longer than that, you charge them.

[kathrynd]

It may help if you stop thinking of them as room mates. They are your boarders.
Nothing is equal. It is your place, and you make the  rules.

Concerning your boarders having guests over...including overnight.
This has the potential of putting yourself and other boarders at risk.
You haven't vetted out these  people.
They are also using more utilities.

If you think it may be unfair to other boarders...you can increase the rent , that will allow occassional guests. (you can put a limit on it)

[mozar]

My house is 920 sq ft and I have a boarder. I really screened people, finding someone who was also introverted was key for me.

[Guesl982374]

I did it for 3 years in a 2br 1 ba 1,000 sq ft condo in my mid-20s. I probably collected $20K from that situation. As a single man I would never live by myself and I would also look for a roommate situation. As a married man with an infant, no way would I sign my family up for roommates. To each their own.

[hyla]

Curious, I've heard alot of people mention that they don't allow overnight guests for their room mates. Should such a rule apply to me, as the owner, to be fair??? I mean I'm the owner and my room is all the way on the other side of the house, whereas theirs are right next to each other.

Also, do you cap, how many people they can have over at one time? Like 2 each? Thing is none of THOSE people have been through a background check, so....

Yet I would think to some extent people expect to be allowed to have a guest over once in a while. I dunno, this and the kitchen I think are the biggest problems to overcome, but I'm sure I will figure it out with some research.

As a renter, I would not rent a room in a place where the landlord put absurd restrictions on how I could live my life.  House rules and guidelines that everyone (including the owner) sticks to is fine as long as they are mentioned in the initial advertisement/meeting.  I'm fine with chore charts, letting my roomies know before I have guests over, and limiting gatherings to early evening, relaxed, dinner parties rather than crazy parties.  And I agree that if a roommate's visiting significant other turns into an additional, nonpaying roommate it's fine to make them leave or start paying rent.  But rules against overnight guests and caps on numbers of visitors? NOPE!  Even if I'm a renter, I want my house to feel like a home, and that means being able to spend time with my friends there. 

[Lis]

Having roommates is a great way to pay your mortgage, IF you can stand having roommates. A friend of mine did it a couple of times and came out way ahead. I would rather chew my own leg off than ever have roommates again, personally, but my friend liked the social aspect.

Ugh, thank you. I thought I was the only one on this site who felt like this. I'm currently paying a premium living in a one bedroom by myself, but my sanity is worth it.

OP, if you're the type of person who likes/doesn't mind roommates, then sure, go for it! If not, and you're dedicated to making this an income property, is there a place you can rent out so that Your Rent+Mortgage < Rent Income?

[MrsPete]

I had great luck with roommates.  I'd start by asking around work or any place you socialize; someone you already know might be a better bet.  If you go with a stranger, develop a lengthy list of questions to discuss together, and don't hurry with your decision. 

I would not agree to a 60 day trial.  Moving is not free, and it's something most of us hate.  I would not agree to do it on someone else's whim. 

I would, however, develop a contract between the two of you so that you're crystal clear on use of shared areas, guests, and certainly expenses. 

[lauraah]

House rules and guidelines that everyone (including the owner) sticks to is fine as long as they are mentioned in the initial advertisement/meeting.

I totally agree with this.  Try to think through what you require and put it in writing from the start.  In the past, I've rented several rooms and found that when the owner had a list of their rules, it was actually a relief in a way to know what they expected. 

I think saying no overnight guests is a bit much.  But I remember at one house where I rented a room there was another renter who was had a lot of different overnight guests and it started to bug the guy who owned it.  He implemented the rule that significant others or good friends were welcome to stay overnight if he'd met them first because he correctly assumed that would fix the problem of having a string of strangers in his home.  I thought that was reasonable.

As for a limit on number of guests, I've never heard of that.  But I would expect that if you're having a party or taking up most of the common area, you'd clear it with a roommate first.  So I guess it would be wise to put that in the original ad.

[Boganvillia]

Are you a good judge of character? If so, you can have more confidence in your ability to make this work.

[Rubic]

If I may make a suggestion, consider a foreign graduate student, preferably in STEM.  Advantages:

• Won't do anything to jeopardize his Visa status.
• Won't do drugs (see above).
• Probably not a party animal and won't trash your place. (ibid)
• You can really be a positive influence and provide assistance, especially since English is probably his second language.
• If you don't get along ... hey, the semester's almost over.

Speaking from in vitro experience.

[Prairie Stash]

I've had great room mates, I'm still friends with them years later. I've had one horrible tenant I shared my house with (basement suite); so I evicted her. I turned my place into a private residence again which is entirely legal; I didn't have to provide a motive other than my desire to stop being a rental. In my part of the world homeowners have more rights than landlords; different rules apply.

If you end up not getting along you can also ask them to move or keep upping the rent until they get the hint. It's surprising how much more you tolerate someone as you jack their rent to obscene levels.

In your area how quickly could you increase rent and by how much?

[AJ]

I love love love house-hacking! We rent three rooms in our house out and it has been a great experience. The only bad roommates we've had were people from our social circle - I highly recommend selecting strangers (it keeps the relationship in the proper landlord-tenant hierarchy). We rent the rooms out for slightly under market value, which generates lots of interest and lets us be picky about who lives here. I can't stress this stronly enough: Go with your "gut" when picking people. If something feels off, you don't have to have a reason, just pick someone else.

Be prepared for an adjustment period when you go from living alone to living with other people (especially if you're an introvert). It will feel weird having folks around in your house and not entertaining them. The feeling wears off, and it feels natural after a while. If you do get a bad renter it will sour you on it (we lived alone for two years after a bad experience). But we picked it up again and are so glad we did!

We have made lifelong friends while having them pay our mortgage. Freaking win-win if there ever was one :)