Renters / roommates

[twinsmommy]

I am about to get a renter in my house. Has anyone else done this? How have you handled the extra money. I know that I need to save some to pay taxes and I was planning to deposit the extra and pay household expenses with it which will free up my resources for debt reduction.

Any suggestions? I am getting all of my rental forms from NOLO and will background and credit check everyone.

[geojen]

Re: Renters / roommates

Just make sure to mentally prepare yourself. Even though it is your house, they are not a guest, they have legal rights to live there if you have them sign a lease. This was a hard adjustment for me.

[LuxLiving]

Re: Renters / roommates

No, I have no personal experience in this but,

before I'd spend any of the money I'd put some back to account for two specific things: increased utility expenses and enough money to hire a lawyer to get them out if need be.

Have you got the phone bill useage lined out in your head as to if they'll get their own phone and not use yours?

[Ima saver]

Re: Renters / roommates

I had 3 rentals at one time. Worst decision I ever made. They tore the houses up and were very hard to get them to move out. I sold all 3 houses for much less than I had in them, I would never do that again!

[rickatheslicka]

Re: Renters / roommates

We have rented a room in our home on three occassions which much success. It is a GREAT way to bring in some extra cash with minimal effort, though some inconvenience, on your part.

We put the rental income into a special "House" savings account. Yes, we pay the taxes on the rental income, but we are only in the 15% bracket, so it wasn't too bad. The rest serves as both our house emergency fund (in the event that we or the renter causes some serious damage) and our home improvement fund. You'll be amazed how quickly it adds up! We recently purchased a new fridge with our house fund - very nice!

I would not recommend using all the cash to pay off your other debts because you really are bringing in some additional risk into your home. You'll sleep better knowing that you have a house emergency fund.

In theory, you can deduct some home improvements from the rental income if you can rationalize that they were necessary for you to rent the room out. (We haven't bothered in the past, but we are going to check it out this year.) So save all the receipts and talk to a tax advisor.

Besides what to do with the money (save save save), some other issues...
1) Always have a lease with a clear end point. (I am not familiar with NOLO)
2) Get a deposit (usually equal to first month's rent). Just remember not to spend it!!!
3) Consider making the renter pay their share of the utilities. If they have to suffer the consequences of turning the thermostat up in the winter, maybe they won't do it.
4) If your renter never leaves the house for long periods of time, be sure to get some alone time anyway - we used part of our "house" fund to go on a little trip (3 blocks away to the closest hotel!) for Valentine's day so we could be alone. Very important!!!
5) Discuss what areas of the home the renter will have free reign to, and put it in the lease. Sure it sounds like no big deal to say "you have full living room privileges" but what if they want to watch CSI while you're watching the big game? Okay, so they have full kitchen privileges, but who takes out the trash and unloads the dishwasher? Be upfront about these things from Day 1 and hopefully you'll avoid hurt feelings later. You don't want your renter treating you like their housemaid. On the other hand, our current renter never puts the dishes in the correct spots, so I'd rather unload the dishwasher myself. Another questions, do you want them to buy their own toilet paper, laundry soap, etc? Figure out how you feel about these things and tell your renter upfront and you should be fine.

Well, those are the main points I can think of so far. Feel free to post any other questions you may have about renting.

Try to keep a sense of humor about things, and keep your goal in mind (with our first renter, I told myself we would buy a plasma screen tv with the extra cash, I totally changed my mind because I loved the peace of mind of having a house emergency fund, but thinking about that TV definitely helped ease the inconvenience!). Best wishes!!!

[debtfreeme]

Re: Renters / roommates

I currently rent a room from someone while I am saving for a house. It is an ideal situation because I have full use of the house and I pay for 1/3rd of the utilities of the house, I would have my own phone line (I just use my cell), I pay part of the cable bill (comes right into my room), and I know that I have room mate responsibilities that I must do which include not leaving dishes in the sink, hand wash them or put in dish washer, keeping the commons areas clean, paying for 1/3rd of the cleaning lady twice a month, etc.

It works for me because my “land lord” approached it as you are coming into our home to be a part of our little family. As a family member these are the things you need to know, a, b, c, etc.

The lease talked about up front everything I would need to do or not do including where I can park in the neighborhood. It is convenient because she travels some for work and then I just have one other person, another housemate, to live with. It is quiet when we want, we live our separate lives but still have hang together and watch a movie. The lease also included exactly what I would have to pay and how much things have averaged for the past year. I pay x amount in rent and then another x amount for utilities. She give me a print out every couple of months or so that says what the house hold bills totaled during that time and if I am over or short. Right now I have a credit of about $200 toward utilities (didn’t use AC much as she was gone for almost a month and I watch the use pretty closely for other electric) which will come in handy when I decide to leave, I won’t owe her anything and will have money coming back.

I recommend a security deposit in the amount of one month rent but if they can’t pay it all at once allow them to add to the rent for a couple months until it totals that amount. I would also recommend stating exactly in what condition you expect the room to be left in (vacuumed, windows cleaned, paint ok, carpet shampooed etc) in the lease so they know exactly what to expect when they move out. The lease should also include what you did to prepare the room for them.

I wish you luck with this endeavor!

[boefixepa]

Re: Renters / roommates

I've had roommates before and have had both good and bad experiences. I also second, or third, the idea of a very detailed lease. Also, a problem I ran into was...boyfriends! It had not occured to me to write that into the lease because I would never let my boyfriends stay with me if I had other single girls living in the house!! I had one roomate B call the police on roommate A because roommate B didn't feel 'safe' with roommate A's boyfriend in the house! It was a mess! I remember waking up to police lights and looking out the window to watch roommate B and roommate A's boyfriend yelling at each other and the cop standind there arms folded looking really bored...I went back to bed. Don't worry, by this point I had already given both of them their 30 day notice.

Also make sure you write into the contract that you can evict them immediately if...and list your deal brakers...drugs...felony arrest...whatever would make you want them out..now!

Also I am sooo grateful I wrote in that either party could end the lease early with a 30 day notice to the other party...it allowed me to get the two above out with little difficulty.

Good Luck, I got a finished back yard thanks to my renters!

[kealina]

Re: Renters / roommates

i was reading a post on another board and there was something that stood out... take pictures (with the date) so you can prove that everything was in good condition when they moved in... if not, someone could claim that the scuffs/holes/damage/etc was already there when they moved in and you might not have a way to prove it... to go along with the pictures, maybe make a list of the condition of things that the renter could sign... just an idea... not sure how it would work but it is a protective measure that goes both ways...i remember someone posting that their landlord was trying to charge them for damage that was already there...

good luck..

[LuxLiving]

Re: Renters / roommates

Yes - don't forgot to detail out the quiet hours and what your pet policy is going to be.

Also back in the day when I had roommates the dishes pilling up and whose food was whoms was always an issue. Maybe they could have their own little frig in their room??

Who was going to cook the once a week group meal was something we spelled out on the calendar. There were three girls and we each cooked one week a month and on the fourth & sometimes fifth week we group cooked. So everyone was home for a community meal on Tuesday night for debriefing: Who was going where on the weekend, who'd be home, when do we expect you back, what are the current house 'issues', who owes what, etc. This wouldn't work for everyone but it did most of the time for us. Of course sometimes one of us had to work or be gone on Tuesday, but for the most part it worked.

Don't forget bathroom issues. We had one girl who was a soaker and would hog the one bathroom for hours!! Who buys the tissue, etc.

Lots to think about but still doable.

[twinsmommy]

Re: Renters / roommates

Thanks for the suggestions. I have rented to a friend in the past. Someone that I work with has expressed interest and I am comfortable with her around my babies. She is almost 50 and has owned her own house before...she knows the kind of responsibility associated and is willing to help me with some things. I am going to move the babies into the master bedroom while I have renters in the house though....I will just feel better that way. It is a huge room and I plan on the renter situation being short term (2 years or less).

I am really trying to pay off bills from fertility treatments...these babies were expensive even before they got here. Definitely worth it though!

[debtfreeme]

Re: Renters / roommates

Oh, and one last thing: make your renter take out renters insurance for their property. I have it for mine, always have, but it is important to you and your family. If something was to happen, your insurance might have to pay to take care of renters stuff and raise your rates. Just something to think about

[jasminecox]

Room sharing is good with your best friend.