In the latter part of the week, I received an e-mail from a prospective “live-in landlord” and it reads as follows:
I am Jxxxxxx and I read your blog and guide and it’s awesome. I really appreciate you making this. I am in the process of buying a rather large home (great deal) better than my rental and plan to rent out an addition. It’s an awesome space that is pretty much separate from the rest of the house. Do you ever think of getting a property manager? How did you manage your lease agreements?
I want this space to not only alleviate the financial (burden is such a harsh word),
but I’d love to help someone out. In my area, there are few rentals that single people can afford. My place has more than enough room for 5 people, but I just would like one person to occupy the space and share common areas.
Please let me know your thoughts.
Most folks like you are buying a house that’s bigger than what they really need and it’s a smart move to start renting out the individual rooms from the start. One of my biggest regrets is not starting to rent out rooms when I first moved in. Instead I waited about 10 months before renting out my first room. The impetus for me was that I needed money for graduate school or else I would be taking on additional student loan debt.
I do have a rental agreement in place between my roommates. If they happen to be a short-timer for 3 months or less, I tend to keep it informal and document the rental price and the due date in an e-mail. For anything longer, it’s nice to have something written out stating what’s expected of them in the long term. Just about anything is tolerable for three months, but I still do my diligence in being selective when picking roommates.
If the price of a single bedroom apartment costs a fortune for a single person to rent, then it’s great that you’re providing more affordable living opportunities for single folks.
Additionally, you can probably keep it occupied nearly a 100%, which is what every landlord strives for. One of my friends summed it with: “Occupancy is money; vacancy is expensive”
Lastly, if you have space for 5 people in your future home, I would suggest starting out with one person and letting that person know that a second person might move-in. If things are working well with that first roommate, then proactive rent out another room. This way, you’ll double your monthly income. I think having 3 people occupy a house for 5 people is very doable.
I currently sharing a 1,600 square foot place with two other roommates for years and it’s manageable.