renting rooms in my house

26 Replies

Hi BP friends, 

Since I have 5 rooms available in the upstairs portion of our huge Victorian, and I'd like to save some more money toward buying our second investment property, I've decided to rent out the rooms upstairs.  At $550/month, I could potentially earn around 30k per year if I get good people in there.  I do have a few questions and welcome your input. 

1. Is there anywhere I can find a boilerplate lease for this sort of thing? Since I will be renting to young people (students, medical interns), I plan on providing a month-to-month lease.  

2. How do I manage the utilities issue? I am willing to offer water and most electricity at no extra charge, but I'd like to put something in the lease that requires payment towards oil and air conditioner usage over a certain point. If people run their air conditioners all day, this isn't fair. It's complicated because it's all in our house and difficult to break up.  Does anyone have advice on this one? 

3. Should I allow laundry usage in the house?  I don't want to.  We are a family of 5 and I don't like the idea of other people using our washer/dryer.  I think it's too much.  Or do you think this is necessary when one rents a room in the house?  

If I rented all the rooms for a limited period, say two years, I'd be in amazing shape to get cash for our next property. Our home is large enough to accommodate our family and renters, but I'm curious to hear what you think.    

Best, 

Amy

What about kitchen use?  You will have to allow that.  Are you ok with multiple people being in and out of your kitchen space and refrigerator all hours of the day/night?

I think you are setting yourself up for a lot of heartache, unless you want to run a boarding house and not consider it "your home". The only way I would ever consider such a setup would be if there were separate, segregated entrances for the boarders part of the home and my own part of the home - otherwise, you are going to have a houseful of houseguests, some of whom may be unpleasant, and NY is not an easy state for evictions. How comfortable are you going to be with a houseful of strangers around your kids? 

Hi.  Thanks for your responses, but let's assume that I'm only renting to fabulous people that I don't mind having in my house and using my kitchen.  My spouse and I are both educators and don't have a problem with young people -- we are used to them. 

I do plan on providing little refrigerators in each room. This is only a temporary arrangement and may even possibly go on while our family is house hacking a fourplex in the neighborhood.  I'm mostly wondering how anyone would handle the energy question.  

Best, 

Amy 

If utilities are your only concern, you calculate how much additional utilities 5 people will consume, divide it by 5 and add that to whatever you want to charge per room to the basic cost. Boarding houses do not generally have separate utility costs, it is a one price covers all type of deal. 

JdMartin, thank you very much! 

I agree the bigger issue is going to be the kitchen. No matter how good of tenants, you're going to be sharing your kitchenware, potentially having people leave dirty dishes in the kitchen, in their rooms, etc. 5 tenants is A LOT - how many bathrooms will they have to share between the 5 of them?

Also agree for the utilities it should be factored into the rent - same for internet, cable, etc. If you don't have central air, I'd charge an additional $25/mo (or whatever is reasonable for your area) for use of an air conditioner to cover that cost, that way people can choose not to use one to save a bit of money.

FWIW, we rent 2 rooms in our basement. Its been an awesome source of income for us but they do have a private bath and dry kitchen. They occasionally come up to do dishes but otherwise have the means to do all of their cooking in their own space and they have their own dishes, pots and pans, etc. 

We did have laundry down there for them but it stopped working before our last tenant and we decided not to replace it - they go to the laundrymat rather than using ours

Thanks, Ashly.  Can you describe what you mean by dry kitchen? I was planning on putting an energy star refrigerator in the room. Maybe a microwave.  Presumably you mean no sink, but I'm curious how they cook...

So far I have two renters who will be staying here.  Perhaps I should leave it at that and see how it goes!  

Originally posted by @Amy Zemser :

Thanks, Ashly.  Can you describe what you mean by dry kitchen? I was planning on putting an energy star refrigerator in the room. Maybe a microwave.  Presumably you mean no sink, but I'm curious how they cook...

So far I have two renters who will be staying here.  Perhaps I should leave it at that and see how it goes!  

 Exactly - no sink. We have a full sized fridge, an induction oven that fits a 9x13 pan, a 2 burner hot plate and a microwave. You can't cook a thanksgiving turkey but they can do quite a bit. This is our 4th set of renters and no one has had any issues with it. They do have a sink in the bathroom obviously so they have water but its just too small to do big dishes in so they bring them upstairs to wash. 

Since you have so many bedrooms, what if you turned one into a common area with a couch, TV and a little mini kitchen space? Maybe same scenario where there isn't a sink but at least you could relive some of the traffic off your main kitchen. 

Since you have so many bedrooms, what if you turned one into a common area with a couch, TV and a little mini kitchen space? Maybe same scenario where there isn't a sink but at least you could relive some of the traffic off your main kitchen.

I actually love this idea. We could easily convert one of the bedrooms into a common area/living space. Put in a dry kitchen and then just let out 4 other rooms. This way the most people would be doing is washing dishes downstairs -- I love it! 

We debated just turning our upstairs into a full apartment and charging rent to a couple or some such, but I like this idea better because we'd still have access to the upstairs and attic if need be. 

Can you recommend a good dry kitchen setup?  

Thanks again, 

Amy

So ours is actually located under our front stoop and the layout was pretty confined by the space we were working with. The room used to just be a leaky storage space with crumbling wall cabinets and peeling cement ceilings. We sealed it, dry walled, put down some laminate tiles and repurposed cabinets I had in my craft room upstairs that had been just storing junk. The fridge was left by a previous tenant so really all we did was buy the corner cabinet (Restore), the counters and purchase the hot plate and counter oven (not shown here). 

Not sure this helps a ton since presumably you have a much different space to work with but that's what worked for us and it didn't cut into the other living space down there. 

I think you are setting yourself up for a serious pain in the back..... 

To make this work you would need to have an additional kitchen at the very least. If not laundry as well. Upstairs.... That's going to get old. I could see maybe renting to one or two people. But 5.... Oh man.

But Ashly, I want to see your oven situation!  

And Ryan D, you're probably right! Maybe I'll start with 2 and see how it goes. :-0

Originally posted by @Amy Zemser :

But Ashly, I want to see your oven situation!  

And Ryan D, you're probably right! Maybe I'll start with 2 and see how it goes. :-0

 I don't remember the brand or what we paid, but its similar to this: http://www.homedepot.com/p/KitchenAid-12-in-Counte...

The "stove" is something along these lines http://www.homedepot.com/p/Magic-Chef-Double-Burner-Portable-Cooktop-Black-MCSDB15B/204984548 

The kitchen and laundry is going to be an issue for that many people, like mentioned above. It's not a bad idea to get a real estate attorney to help you write up a lease agreement just to make sure you nail all the fundamentals. Start off with one, then two, and I think after 2-3 you might want to cap it. Another option is turning one of those extra bedrooms into another bathroom and laundry room, adding another bathroom should add some value, rather than having like 8 bedrooms.

http://www.amazon.com/Cuisinart-CMW-200-1-2-Cubic-...

http://www.walmart.com/ip/Avanti-IH1800L1BIS-Porta...

Hot plates are a fire waiting to happen.  The induction cooktop is more energy efficient and much safer since only the pan gets hot.  I also have Magic Chef micro/convection counter top ovens that I got at Costco for about $150 in most of my places.  You can cook a 12 pound Thanksgiving turkey.  

I would use a standard MtM lease and link to very thorough House Rules.

I would include a base electrical usage and split the overages equally.

Three children?  I would contemplate using one of the  5 rooms as the common area for 4 tenants.  Easier to have their shared kitchen and lounge area away from your family.  You could probably charge more for each room if they have an area away from the landlord.  

The parking impact on the neighbors is what will probably get you in trouble with the city.  

@Amy Zemser I rented a room for three years and will do it again. I disagree with what some people say about it being a headache... If the numbers work, the numbers work. I didn't split up utilities and kept the utilities in my name and charged a little more. The cash flow is insane and as crappy as it is sharing your house, one would think that your goals and dreams in 10 years justify that. Just my 0.02

Bob Bowling, what is an MtM lease? 

Nick Britton, thanks for your encouragement! This is just a two-year plan so we can save money to get another investment. I can suffer through a few people upstairs while my kids are little.  We're all piled in one bed anyway, for Pete's sake, and it's just ridiculous to have all that empty space and not make use of it.  

The nice thing about our property is that we have space in our garage for 3 cars. So this takes care of the parking issue.  

I love the idea of using one room as a common area. Perhaps this would offset the pain of not offering laundry usage. If 3-4 people were renting, I wouldn't be able to accommodate laundry because of my own family.  

Thank you all for your input! 

Nevermind -- MtM is just month-to-month.  I thought it meant something more complicated.  

Would you ask for a security deposit? 

Best, 

Amy

Originally posted by @Amy Zemser :

Would you ask for a security deposit? 

Best, 

Amy

The LARGEST your local jurisdiction will allow.

Originally posted by @Amy Zemser :

Hi BP friends, 

Since I have 5 rooms available in the upstairs portion of our huge Victorian, and I'd like to save some more money toward buying our second investment property, I've decided to rent out the rooms upstairs.  At $550/month, I could potentially earn around 30k per year if I get good people in there.  I do have a few questions and welcome your input. 

1. Is there anywhere I can find a boilerplate lease for this sort of thing? Since I will be renting to young people (students, medical interns), I plan on providing a month-to-month lease.  

2. How do I manage the utilities issue? I am willing to offer water and most electricity at no extra charge, but I'd like to put something in the lease that requires payment towards oil and air conditioner usage over a certain point. If people run their air conditioners all day, this isn't fair. It's complicated because it's all in our house and difficult to break up.  Does anyone have advice on this one? 

3. Should I allow laundry usage in the house?  I don't want to.  We are a family of 5 and I don't like the idea of other people using our washer/dryer.  I think it's too much.  Or do you think this is necessary when one rents a room in the house?  

If I rented all the rooms for a limited period, say two years, I'd be in amazing shape to get cash for our next property. Our home is large enough to accommodate our family and renters, but I'm curious to hear what you think.    

Best, 

Amy


Amy,

1. Many leases are specific to the state you're in. I would suggest google searching "New York Lease Agreement" or contacting a local real estate agent to get an example. If you use another non state standard agreement, you run the risk of not including any state specific clauses that should be in there. Once you've got that, I'd encourage you to add any additional addendums you'd like (ex. who pays utilities and how, etc).

2. Using a RUBS system (ratio utility billing system) best. Divide total utility costs each month by sq ft each tenant is occupying. That is the fairest way to do and and its used by apartment owners who aren't submetered.

3. It's a nice benefit, but if you don't want to don't. Just make sure you discount the rental rate accordingly.

@Amy Zemser

You can use Rentometer.com to conduct a rental survey to get a sense for the rental rate you should set them at.  Also, be sure to discount them if others include laundry and other amenities that yours does not.

 @Amy Zemser :

1. Is there anywhere I can find a boilerplate lease for this sort of thing? Since I will be renting to young people (students, medical interns), I plan on providing a month-to-month lease.  

2. How do I manage the utilities issue? I am willing to offer water and most electricity at no extra charge, but I'd like to put something in the lease that requires payment towards oil and air conditioner usage over a certain point. If people run their air conditioners all day, this isn't fair. It's complicated because it's all in our house and difficult to break up.  Does anyone have advice on this one? 

3. Should I allow laundry usage in the house?  I don't want to.  We are a family of 5 and I don't like the idea of other people using our washer/dryer.  I think it's too much.  Or do you think this is necessary when one rents a room in the house?  

Hi Amy!

I rented out rooms in my house for more than a year. I was traveling at the time extensively and wanted someone home for my dogs, planning on living in Florida and wanted to have someone watch my house in Montana. It worked out great except for too many dogs in the house. 😳 I thought it would make sense to have pet owners live with me but it was a big, furry mess! So I wouldn't recommend people with animals. The boys were great. I loved having them there.  

That being said, I'm not sure I would do this with my family living in my house. You could always start with one tenant and see how it goes. 

My comments on your questions below. 

1) I'd suggest starting with a lease that is standard through your state's department of realty. Ask others in your state for suggestions. 

2) I'd include utilities as part of the package. Sounds too complicated to split it up. You could ask them to turn air off when they are it in their rooms as part of "house rules." 

3) Laundry is up to you. I included use of it. Perhaps you could assign days. 

Good luck! I do think if you're open to the idea, it is a great source of money. I'd do it again but now I live with my boyfriend and it would drive him nuts. LOL

Have you considered AirBNB if it is an option in your area? Probably much easier to manage with more upside potential.

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