House Hacking - treat your roommate like a tenant?

Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes

9y

I wouldn't do a one year lease, especially for renting out a room. You don't want to lock yourself into something should things go south. Chicago is VERY tenant friendly, so be careful. Since you live in the unit, you are not bound by the CLTRO, but still take care. I'd suggest doing a list of rules that the "roommate" signs, and keep it month-to-month.

Will C.

Rental Property Investor · Richmond, VA · Member since 2016 · 279 posts · 133 votes

9y

@Victor So definitely do a proper screening, after all you will be living with this person. You can have them submit a paper application, I suggest use an online provider for background/credit check, trans union SmartMove is user friendly. When you find someone who meets all your criteria, have a meet and greet to feel out their personality. As mentioned above, M2M lease max and check/be familiar with your local laws. Probably have rules listed in the lease or as addendum and go over them at lease signing. Treat all the formalities as a tenant/LL relationship but day to day living can be treated more as roommates. As long as your expectations are laid out in the beginning, there shouldn't be any major issues. my $.02.

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Linda WeygantPro Member

Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes

9y

Originally posted by @Brent Coombs:

Short answer: yes - financially, treat them like a tenant (if the HOA rules even ALLOW sub-letting)!

I've seen enough Judge Judy episodes to have learned one thing: get EVERYTHING in writing!

I'll leave it to others to suggest best methods to advertise. All the best...

This is not subletting. Subletting is when one person rents the property from an owner and then rents it out to others from there.

This is just "getting roommates" or "househacking" as BP has termed it and no HOA can prevent you from getting roommates. They can prevent it if you don't live there too, but as long as you live there, it's permissible.

6 Reply

Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes

9y

@Victor So, I am a landlord and renter in Chicago, so I'm familiar with the laws. I've read the CLTRO front to back. Although you are not bound by the CLTRO, if you provide a Chicago lease, you will be bound by the language in the lease which favors the tenant. Do a month-to-month rental agreement. Also, I advise against collecting a security deposit, as Chicago is VERY VERY strict on security deposits and one little mistake and it can cost you dearly. That's why Chicago landlords do move-in fees.

Ivy Pierce

Hazel Crest, IL · Member since 2017 · 38 posts · 11 votes

9y

@Ray Harrell can you advise what the CLTRO is and where it can be found?

Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes

9y

Chicago Residential Landlord Tenant Ordinance (CRLTO)

http://library.amlegal.com/nxt/gateway.dll/Illinois/chicago_il/title5housingandeconomicdevelopment/chapter5-12residentiallandlordsandtenant?f=templates$fn=default.htm$3.0$vid=amlegal:chicago_il

Victor SoBusiness Member

OP

Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 193 votes

9y

Linda Weygant What are the tax implications to having a roommate tenant? Would I file my taxes differently to reflect that I am a pseudo landlord? Even though it's just a roommate I should treat this as a business, right? Ray Harrell Where do you find your lease documents? On the same website you posted here?

Victor So Real Estate LLC517 Reviews

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Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes

9y

Domu.com has all the things you need for Chicago properties, including residential lease and all the stuff you have to have for a lease. HOWEVER, if you live on the property and it's less than 6 units, you are not bound by the CRLTO.

3 Reply

Linda WeygantPro Member

Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes

9y

Originally posted by @Victor So:

Linda Weygant What are the tax implications to having a roommate tenant? Would I file my taxes differently to reflect that I am a pseudo landlord? Even though it's just a roommate I should treat this as a business, right?

Ray Harrell Where do you find your lease documents? On the same website you posted here?

Unlike a traditional rental, "househacking" is considered Business Use of the Home and you should utilize form 8829 in conjunction with Schedule E to report the income and associated expenses.

Ryan Huggins

Real Estate Broker · Thousand Oaks, CA · Member since 2017 · 63 posts · 33 votes

9y

YES!!!! For your protection and theirs. Interviews, backgrounds, rules, regs, etc. Heck, maybe you can even throw in "landlord gets invited to cool parties" into the agreement (just kidding).

Before doing anything, of course, investigate all the laws of the land in relation to room renting.

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

9y

M2M or week to week agreement. House rules should cover visitors,overnight guests, utilities, parking, cleaning.and use of common areas and termination /notice period. There are roommates and there is more of a boarder situation. For students you need to be very specific.

Victor SoBusiness Member

OP

Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 193 votes

9y

Thanks guys! One of my friends actually asked if he could rent out my room, so my house hack officially begins 8/1!

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Steven D.

Investor · Arvada, CO · Member since 2017 · 109 posts · 112 votes

9y

Even though he is your friend still get a lease and do everything by the book, will save you headaches in the long run.

Billie Miller

Real Estate Agent · Denver, CO · Member since 2014 · 151 posts · 101 votes

9y

Good work! Definitely have him sign a lease and provide a security deposit though. Make sure you all understand all the lease clauses as well. It protects all of you.

You might want to talk to an accountant as well. When we house hacked we treated expenses related to each unit differently, because one was considered our residence and the other a rental, basically. (I think haha)

Victor SoBusiness Member

OP

Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 193 votes

9y

Thanks Billie Miller ! Linda Weygant Since I'm just renting out a room, my unit wouldn't be considered a rental right? But, since we are sharing common areas like bathroom, kitchen, etc., what are the tax benefits?

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Linda WeygantPro Member

Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes

9y

Originally posted by @Victor So:

Thanks Billie Miller !

Linda Weygant Since I'm just renting out a room, my unit wouldn't be considered a rental right? But, since we are sharing common areas like bathroom, kitchen, etc., what are the tax benefits?

Pro rated portion of mortgage interest, property taxes, hoa, utilities, depreciation, etc.

Check out irs form 8829. Could be pretty beneficial for you.

Victor SoBusiness Member

OP

Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 193 votes

9y

Linda Weygant You're amazing! Thanks!

Victor So Real Estate LLC517 Reviews

Victor SoBusiness Member

OP

Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 193 votes

9y

Ray Harrell and everyone else! What do you guys typically charge for a move-in fee?

Victor So Real Estate LLC517 Reviews

Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes

9y

There are laws dictating how much you can charge for a move-in fee.