Renting out Rooms in rental property - students
Investor · Monterey, CA · Member since 2014 · 174 posts · 55 votes
Hi:
I just bought a rental property a while back and it is now vacant. My daughter is a college student and she asked me if she could rent a room in the 3 br house and find other students to rent the other two rooms. I know other people do this but this is one of my main sources of income and I am hesitant... Can anyone give me some advice here? Should I have individual lease agreements for each tenant, and should they be for one year? My daughter is responsible, she is 25, but still....? Thanks! Gayle
I'm not involved in student rentals but one cool tip I've read is to get the students already in place ( in this case most likely your daughter) be involved in the interview process as a final filter. That made all sorts of sense to me because if the students don't get along from the start, you are gonna have a bad time trying to play peacemaker in that situation.
@Gayle Eisner one of the benefits of renting to students is that when you rent by the room you can likely end up with a higher total rent. The downside is that if the tenants end up in a bad roommate situation it can be trickier. Just make sure to fully screen them like you would any other tenant, ensure that they're responsible and have a reliable way to pay the rent (job, parents, etc.). Good luck!
great thank you!
@Michelle Cunningham has a good advise here. Running a proper tenants’s screening is a must.
Also you can ask for personal references from their friends or even from lecturers. They help you to understand tenant’s character and personality.If anyone of them has a job, you might request an employer's reference.
I advise you to conduct interviews with each student as well. Your can ask questions that interested you and answer applicants' questions.
I'm not involved in student rentals but one cool tip I've read is to get the students already in place ( in this case most likely your daughter) be involved in the interview process as a final filter. That made all sorts of sense to me because if the students don't get along from the start, you are gonna have a bad time trying to play peacemaker in that situation.
Thank you, yes, my daughter can be the "tenant manager" . Thank you!
@Gayle Eisner If your going to rent exclusively to students I'd first 1. have separate leases for all tenants which clearly outline your responsibility and the responsibility of the tenant(student). 2. I'll have all the leases personally secured by a guarantor i.e. parent or relative of student. The fact that your daughter will be expected to manage at 25......you have to vet her just like a property manager. you should interview her as bad as that sounds. This is a business arrangement not personal. Hope this helps the situation. Good Luck!
I know this is a great opportunity to generate income and for your daughter to get some great experience.
Definitely screen the 'applicants' and interview them and trust your own judgement.
I don't think there would be a lease in place in this situation, but would be up to your daughter to manage the property. I imagine she would be renting to friends.
@Gayle Eisner The main thing that makes me nervous about your situation is that you said it's a main source of income for you. If you can't afford for mistakes to happen with this situation, then I would just rent it out to someone else. Your daughter doesn't have the experience to find good tenants and be a PM.
If you think she would do a good job AND you can afford to lose a few months of rent in case she can't find roommates or someone doesn't pay, then I think it's a great way for her to get a little life experience, and you can usually make a little more when you rent to students.
Do ONLY 30 day leases with 30 days notice with roommates/rooming houses.
Or 60 days if you need at most, never a year lease for a roommate. Ever.
So much easier to get a bad roommate out with month to month leases, and the roommate is generally more careful not to anger the roommate/owner with month to month leases knowing they can be asked to leave at any time. Been there, done that with the 1 year roommate lease-- NEVER again. Never never never. Repeat after me, month-to-month lease with roommates.
Have the roommate agreement specify occupancy limits, including overnight guests. College students (and any roommates) WILL try to let their boyfriend/girlfriend, sibling, friend, etc. "crash" in their room a few nights a week or more. That runs up utilities, risk, liability, noise, parking, wear and tear, etc. My roommate agreement specified the number of nights limited per roommate, with a clause on them not accumulating, not being transferable, and applying to any guest that roommate has that month-- not per houseguest, but total houseguest limits per month.
Have a lease AND have her have a roommate agreement with her 'sub-tenants.'
My roommate agreement specified things like: furnished or unfurnished, maximum occupancy- limiting number of overnight guests as it's bills paid roommate living, if it's co-ed or single sex, no smoking vaping e-cigs or substances on the property, cleaning chores/expectations, no underage drinking, pet rules, what utilities are included up to what limits and what utilities aren't included, etc.
Require a security deposit from each roommate, even if small.
Get a locking thermostat cover; set utility allowances so people won't take advantage of "all bills paid" rooms and have the daughter/master tenant or whoever is paying the utility bills be the person who sets the utilities. Or split utility costs with each roommate paying a utility deposit upfront and/or adding their name to the utility bill.
Have a strong lease with occupancy limits (including overnight guests-- it's a roommate lease, my city allows roommates to specify this), quiet enjoyment/don't disturb neighbor clauses, verify a student's court record search for evictions and criminal history (they might be young, but still can have them), noise rules, and a strong disclaimer.
Strong disclaimer was my biggest rule- waiving of inconvenience, injury, loss of property, etc.
I would have your daughter rent from you as the master tenant-- then the roommates rent under her. She's got less assets to go after than you if a roommate tries to sue.
I wouldn't interview your daughter as a property manager... if you do this, it's doing it as a favor to your daughter. If my normal tenant asked if they could rent out rooms, my answer would be NO. NEVER. Not in a million years. You're doing this as a personal favor to your daughter.
This is your main source of income? Does your daughter already live there? What if your daughter gets fired and can't pay you--- are you going to evict your daughter? Charge her $2000 to replace the stained carpet? Have your property foreclosed on if you get $0 a month from her? Expect, at best, to get your normal rental rate paid by your daughter. Roomming houses aren't huge money makers after you factor in vacancy, taxes, and utilities if you're doing "room for rent- bills paid."
It would be so much cheaper and less risky just to rent your daughter a $500 bills paid room in *SOMEONE ELSE'S ROOMING HOUSE." If your daughter can't afford the rental rate on her own, no roommates needed, you're taking a risk-- and you'll have to pay the difference in what she can't pay. She'll have to compromise on rental qualifications to have no vacancy with roommates if she can't afford the rental rate on the house on her own, and that's risky, at best.
I would have her choose older students, no 18 or 20 year olds. Underage drinking is too common, and 18 year olds don't know how to not damage a house more often than not. I found students and young professionals 24-28 so, so, SO much easier than 18-22 year olds... yuck! At 25, she should seriously expand her reach to young professionals... 24-30 is an ideal age. By then they have often toned down the partying somewhat, gotten a job (fewer late night loud parties that disturb neighbors), care more about their credit, have some idea of the damage they're doing to a property, etc. An 18 year old freshman will generally be whiny and complain about everything, while a 25 year old will appreciate the cost of living and value of a "room for rent." Find roommates with a job and school, they're less likely to be entitled "call their mom" types that whine about everything and annoy you. Upper 20s/lower 30s young professionals are so much easier- they've usually rented before, are trying to settle down and start a career, and know how to work a washer/dryer-- unlike many 18 year olds these days. o-O
So if your daughter rents 1 bedroom,, that's 2 bedrooms left to rent.. Are you limiting number of students per each bedroom? or can they couple up? Can their friends stay the night?? or nights??
I think the likelihood of responsible students is risky, I think the better likelihood of qualified tenant would be better.
You'd probably not see much income in rent from your daughter, she'd want $$ for managing it, so how badly do you need to run a charity house for friends, of your daughter,, cuz they only need a place to stay for a week or so, until they find something.
Room rental is a never ending common place clean up bickering headache get tenants that can figure it out themselves and qualify and be done with it
Hi Matthew:
First of all THANK YOU for taking the time to help me out. It is a large source of my income but I am trying to have it work out, if possible. My daughter is pretty responsible and wants to manage and be in charge so I think it (hopefully) it can be a win/win here.
I am taking your advice and have her choose older students, no 18 or 20 year olds. She would like someone closer to her age, anyway, so not younger 18-20 yo students. MA students and young professionals 24-28 so, is perfect for her as well " By then they have often toned down the partying somewhat, gotten a job (fewer late night loud parties that disturb neighbors), care more about their credit, have some idea of the damage they're doing to a property, etc. An 18 year old freshman will generally be whiny and complain about everything, while a 25 year old will appreciate the cost of living and value of a "room for rent.Upper 20s/lower 30s young professionals are so much easier- they've usually rented before, are trying to settle down and start a career, and know how to work a washer/dryer-- Thank you- Good Advice!
She is looking to Find roommates (24-28) with a job and school, like her, & I am asking for a deposit of one month's rent upfront, separate rental agreements outlining utilities, quiet hours, etc and a credit check. I am giving her lots of room (no pun intended!) i.e. time to find the right persons within reason.
What are your thoughts on a couple renting a room, if both sign separate rental agreements if one leaves?
great advice, thanks again!
Hi Matthew:
see above
Double the cost for most utilities for couple, and I'd absolutely have 1 person per room agreement only.
Sharing the bathrooms are huge issues.
I have had 6 rental houses, but only rented them out to medical students, nursing students, etc. They were all on student loans, didn't want their credit dinged and were always studying. I did have a few college students, but you are at risk of the house getting damaged, late rent payments and them not caring about their credit score.
Definetly run credit and criminal background checks on them, talk to their last landlord, request their last 3-4 semesters worth of transcripts, if they have a part time job, talk to their employee and if necessary, meet the parents and have them consign on the lease.
Here's the update. It's been 3 weeks since we have tried to rent the house. My daughter moved in but is having poor luck finding tenants. She is picky and wants someone that is compatible and has good credit. I am getting worried that my generosity is going to have me take a financial bath. Any thoughts, comments, suggestions? I am considering lowering the rent.... The house is paid for but that doesn't mean I don't need the income....dang! thanks all! Gayle
I'd tell your daughter your going to advertise it for rent as it had been before, If she can fill it before you do then fine, she can stay, It's a race. See who wins, If she doesn't get roommates before you sign a new tenant she's going to have to move out, as of their new move in date.
Fair is fair and she's had almost a month to get someone in, maybe it's better this way.
I would think your timing is off to find a college roommate. Most secure those during the summer or begin of fall semester. Yes the spring semester is coming but may be too far out. I might give her a little more time to find people or help her find people as this would create more income.
Thank you Jim. I think I will, with Dec around the corner my prospects are getting smaller. I'm just glad my payment is very low. Cross fingers! Gayle
Here's the update. It's been 3 weeks since we have tried to rent the house. My daughter moved in but is having poor luck finding tenants. She is picky and wants someone that is compatible and has good credit. I am getting worried that my generosity is going to have me take a financial bath. Any thoughts, comments, suggestions? I am considering lowering the rent.... The house is paid for but that doesn't mean I don't need the income....dang! thanks all! Gayle
Financial bath, indeed. :(
She needs to be less picky. Good credit.. for a student rental? They shouldn't have trashed credit or very recent repos/collections, but you can't expect a 700+ credit score in a college kid looking to rent a cheap room.
NO couples in a roommate house. NEVER NEVER NEVER.
For one, that's more wear and tear. Two, more noise. More parking. More damages. More awkward encounters. More awkward... err... nighttime noise. It's also an "us vs them" battle if anything goes wrong. The couple always takes the side of the couple, not the roommate. It's more utility costs, liability (2 vs 1 person), wear and tear, noise, cooks in the kitchen, bathroom sharing, etc. just for the same total rent profit (couples often just pay a little more in utilities, not double the rent). Not worth it at all. Not fair to anyone involved.
When they break up, one is stuck trying to come up with rent, and it's a mess deciding who gets to stay.
It's not fair for other people in the house if a couple gets a "two for the price of one" special with rent where the "couple" only pays extra utilities and gets "free rent" for the second person. I wouldn't deal with a couple unless it meant a few hundred more a month in profit-- on top of their added utility costs-- and even then, I would only consider it if I was truly truly desperate and never home. And even then, I'd have a 5% chance of ever agreeing to a couple in a roommate house even then.
My leases strictly say single occupancy only, no subletting, no leasee replacements, no additional guests, and limit roommate "overnight guests" to no more than 4 nights/month total guest count- not individual guest, with nights not accueing. My state allows this for roommate houses.
It's not peak moving season, but if you're targeting young professionals, you would have more luck than students right now. Are there many 24-28 year old working professionals in your city?
I "renew" roommate posts on craigslist daily.
All the "have parents co-sign, ask for 4 semesters of transcripts, talk to employer, credit check" are things I don't do. I run their PACER and court record search, I do rental history, I do criminal history, and I do basic job/school/income verification.
I wouldn't have her list specific ages like that. 24-28 is the ideal target, not something to advertise. Just put "full-time working professional and studious student seeks same in a roommate who has a day job/school outside the home" or something, noting that it's a very quiet home, not a party house, few visitors, etc. If someone comes along who's 29 or 30-35 and are a good match, she should consider it. It's the 18-21/2 crowd that are usually too new to rentals to appreciate it, and are too whiny as roommates, and more likely to still be party types.
She'll want/need to go co-ed to get decent applicants... usually females above 25 are hard to find. Too many live with their boyfriends/husbands already, if not their female friends. I also always listed "absolutely no smokers, not outside smokers, not inside smokers" on my roommate listings, blaming asthma. Otherwise, you get outside smokers, and they bring that horrid smell inside even if they actually go outside to smoke every time (they often don't, especially in snow/rain... and crack a window, at best). I don't allow vaping or pot either.
If she allows short-term rentals (with 30 days notice) and month to month, she'll have better luck filling rooms right now. (And potentially more vacancy later. Personally, I always keep a roommate listing ad up on craigslist all the time, empty room or not. I don't add photos to the listing. That gives me a constant array of people to email when a room opens, as I do short-term roommates often.)
How much is she charging for a deposit? 200-300 is probably the upper cap. If someone could afford $500 in rent and a $500 deposit, they'd probably get their own apartment.
Is she allowing pets? Pets can damage, but I say "crated pets ok." No outdoor (not good weather, and noise would bother neighbors) and no pets wandering the house without their owner present. I don't allow cats. Allowing pets, especially larger pets, adds some new potential tenants. I had a roommate with a 100 pound lab that even had the dog wear dog shoes so the wood floor wouldn't be scratched, and he took his dog to dog day care and training regularly. I had a 10 pound dog with a careless owner who jumped/scratched on my doors/windows and peed on the floor all the time. I had to get rid of that roommate. And add "crated dogs" as one of my rules. The owner is the problem with pets, not so much the dog size.