House Hacking Problem: Roommate always late in rent
Hi BP - looking for some advice because I am in a sensitive situation.
Basically, I violated the age old rule of rooming with friends. I put goodwill and faith that everything will work out and be OK... not. Long story short, a friend of mine is renting a room. It's been fine in terms of the day-to-day living situation and there are no issues there. I really enjoy the benefits of house hacking. However, there are a few things that have been bothering me:
1) he never pays in full and has to break up his payments,
2) I don't know when he's going to pay and
3) sometimes he'll shut down and not respond / make up an excuse when I nudge him.
Granted, he DOES pay in full by the end of the month every single time but I'm over it. Some months are great, other months he's inconsistent. I've already had at two or three conversations with him about being more communicative and to let me know when he will pay. He has financial hardships, but I've done my duty as a friend on being lenient and understanding. What really got me upset this month is when I noticed that he went Christmas shopping for gifts but has yet to pay me rent. I feel like if he were renting an apartment elsewhere, he'd get slapped with late fees over and over again.
My brother is a lawyer, and he told me that I need to evict him because he's taking advantage of me. I texted my roommate saying that we need to talk tomorrow and he agreed. I also asked him about rent and he made up some stupid excuse... so now I'm really upset. At first I was going to say that if he MUST pay by the 1st, otherwise this situation can't continue. But my brother is adamant that I terminate this living situation. What do you guys think? How would you have this conversation? Please note that he is a friend, and we share interests and know the same group of people. :(
Thanks!
Lisa, can be tough doing business with friends. Sold a car to a friend years ago, agreed to accept payments, my mistake, went through way to much drama collecting.
Yes, you definitely broke the rule about rooming with friends. However, that is in the past and you cannot undo that now.
It sounds that although you are very upset with him, you want to maintain your friendship. I also agree with you that he is taking advantage of your friendship.
It is probably not the worst idea to evict him, but I am going to answer this going with the thought that a flat out eviction will potentially end the friendship and you don't want that.
Therefore, in your conversation with him you need to politely but firmly inform him that you have issues with how things have been and want to formalize the landlord/tenant relationship. Inform him that you plan to have him sign a lease (I am guessing you don't have one in place since he is a friend; if you do you need to revise and/or enforce it). Also tell him that there is going to be a penalty clause in the lease for late rent payments with whatever grace period is required by Texas law, if any. I would suggest having an actual attorney draft the lease for you.
If he doesn't want to sign the lease that is fine; he can move out. If he does, you do need to follow through and enforce it; it doesn't do you any good if it is just a piece of paper that you both ignore.
So unlike @Brian Schmelzlen. I am going to be a little more tough and agree with your brother in evicting him. You have already messed up the cardinal rule of land lording by renting to your friend, now you have made it worse by not implementing guidelines for being late on the rent.
He has now become complacent in not paying on time. Do you think talking to him now will change anything? I think not, his actions has made it clear it won't work. Now you have to shake up the status quo and evict him.
Yes he will be mad at you, yes you may lose a friend, yes he may never talk to you again but that's the pitfalls of mixing business with family/friends. Its up to you to figure out which is more important to you at this stage of life, friends or setting up legacy wealth. I would take the latter, because friends come and go but your nothing beats your own happiness and peace of mind.
Is there a written contract?
What does it say in your written contract about late payments?
You can't make this stuff up as you go along. If you're going into a meeting with this individual you best be prepared! Would you go to court without all your documentation and expect to win a settlement?
If you have a contract in place I would take the "meeting time" you have to go over said contract with your tenant. (He/she is NOT your room mate even though you share a space YOU are the landlord!)
Without a doubt your tenant has been taking advantage of you. The fact they will go out and get gifts, pay for their phone, computer, internet, car payments and NOT rent shows you their priorities.
If you continue to have issues at some point you may see yourself in court. So I would recommend the following:
1) Get some sort of contract (lease agreement) put it in writing and have your tenant sign the document. The contract should include ALL items you would normally find in a tenant/lease agreement.
2) Establish a method of payment that will be consistent and on time. Some people like setting up something with their bank where they can automatically transfer funds to your account. Others like writing post dated cheques. What ever method you come up with, just make sure it's NEVER an issue for you to receive payments on rent.
I have house hacked and let me tell you nothing is more uncomfortable than sharing the same living quarters with someone who is past due on their rent and seeing them day to day. It's absolutely awkward!
Contracts will in the end settle any/all disputes, learn from this and start treating your business like the proper business it is supposed to be.
Lisa Marie Steve S. - Steve and the others have great points. I ran a house hack where I lived in one room of a 5 br 3 ba. I ‘never’ have late payments because I won’t stand for it. I have bills too. I am not a charity. If he won’t pay, show him 10 craigslist posts where his room could be bringing you x rent from a stranger and tell him to find another place ASAP. I give my evict or quit notice on Day 2 of the month every time. I never ever say anything mollifying like I know things are hard right now but get me rent when you can...
Other thoughts:
0. If it’s not in writing, get it in writing. Written expectations are important. I make my tenant Roommates sign chore share agreement sheets.
1. Some people are very bad at budgeting. You should take the rent every paycheck day (two weeks?) by PayPal, Venmo, ach, check, cash, whatever. If the money leaves his account after his paycheck before he can spend it on anything else, it might work out such that he pays you on time. Ie yearly rent agreed to in writing divided by 26 payments + 1/2 mo utilities.
2. You train your tenant. If you let this person know it’s ok not to pay you on time, there’s no wonder you don’t get paid on time. Rent is most people’s biggest expense. It’s not your issue if he’d get hit with all kinds of late fees without your help. Help him be mature. The worse case scenario for you is you don’t get paid rent for months, your property is damaged and you lose your friendship, all combined, by the time he leaves.
3. When you talk say, hey this isn’t going how I expected. I need you to pay me by the 5th every month so I can pay my mortgage and utilities, or I need to you to move out so I can put in the room someone who is more reliable. Thanks
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If someone is willing to let you pay for their boarding and doesn't care that they leave you high and dry to pay the mortgage, they are not a friend. Being irresponsible when it comes to paying a faceless corporation, like a utility bill is bad enough, but when the person you are causing undue stress to is sitting on the other couch, that's completely inexcusable. You have no reason to feel bad about evicting them and you should be able to find someone else who will appreciate the fact that you came up with the down payment, it's your credit score on the line and you're the one paying for any large maintenance. This is a great experience if you plan on doing buy and hold as you will probably do a very good job screening tenants now since you've had this situation.
I think that the only way to save the friendship is to get him out. Explain it in those terms. "I really want to stay friends but this isn't working out. I need a tenant that can pay on time. Having to hassle you to pay me on time and in full is damaging our relationship. I need you to move out by xxxxx so we can continue to be friends without this complication of paying rent."
I agree with others. He obviously doesn't respect your friendship or the situation. If so, this wouldn't be an issue.
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You are mistaken in believing this person is your friend. He is not and is using you. Time to find a new friend.
Handle it any way you choose but bottom line is this person is not worth being concerned about. My advice would be to give him two crystal clear options. Move out voluntarily before Jan 1 or face eviction. When he asks to extend the move out date tell him the eviction process begins January 1.
Being a friend has screwed you, welcome to the real world.
If you want to keep this person as a friend/tenant, the best option IMO is to change the contract. If it's legal in your state, offer the rent at a discount. The current rate is the discount, and it increase X amount (I'd do $100-$150-- the incentive has to be there) if it's not paid on the first. Be very upfront and clear with the terms, and make sure you enforce it. We've changed habitual late payers this way!
I'd tell them you're getting killed with late fees due to their non-payment or late payments, so it just evens it out.
@Lisa Marie asking him to leave will terminate the friendship, so if you don't care about that then go ahead and ask him to leave. Otherwise I would just tolerate it. As far as evicting him, that is silly at this point. Tell him you need him to start paying on time or he needs to look for a new place. Tell him those are the only two options. Eviction is for when someone has been asked to leave and doesn't. You never evict someone before trying to get them to leave peacefully.
How do you spell LOAN or RENT to a Friend or Relative. G-I-F-T.
Whatever you do - other than letting the person continue on with current behavior terminates the "Friendship" from his standpoint.
And even continuing the current situation will eventually terminate the "Friendship" as YOU will more and more resent the situation.
@Lisa Marie I think you have been giving him plenty of chances and he clearly doesn't respect you or your friendship enough to understand that you are running a business. Because from what it sounds like is that you have been a VERY good friend by allowing this for to long and he has been just been absent minded with his choices. Did you also have it written in a contract? Stating what needed to be done because that could have been a factor as well. So you don't ruin the relationship because I'm assuming you still want to be friends with him. Be firm but still act as his friend to get him to understand that this cannot continue and he needs to move out by a certain time frame and you are seeking a new roommate. Like what @Brian Schmelzlen said.
I wouldn't work too hard on evicting him. The threat of eviction should be enough. Look it was said here before and I have to agree you don't lend money to friends and family. If you do don't worry about ever seeing the money or the person again.
Bottom line what do you want to do? Do you want him to stay and pay rent on time, then set up automatic payments. If you want him to go then tell him what the consequences of an eviction are, take your losses and show him the door.
I don't know that I'd push the eviction thing so fast. Not when she's house hacking and living with the tenant. I think there is some value with living with someone you at least know a little. Now if you have another friend that will take his spot, then I would suggest evicting him.
Otherwise, I'd look to put a lease in writing with him which I don't know if we can tell whether you have one or not.
If you don't, then that would be your first step. Put together the lease. Put down a late fee. And then put down the eviction process so he realizes he can't just milk it for the entire month. Rent is due on the 1st, 3 day grace period. Its late on the 5th. If you don't pay by the 5th including your late fee, you get a 5 day notice. If you still don't pay, the eviction process is started and then you're out.
Something is wrong if he can't come up with enough money to rent a room. Its not that he can't get the money, its that he's choosing not to give it you. Much like the xmas shopping. I've heard that a few times over the years - we're going to be short because we did our xmas shopping. My response is always the same - Thats not you buying your family xmas presents - thats ME buying your family's xmas presents.
I also tell them that I'm not a bank and I don't give loans to people so I'm not going to float their rent for them which is essentially what they're asking me to do. They should go to their friends and relatives and get a loan for the rent - especially since they are "going to have it" in a few weeks anyway.
Again, I would recommend putting together the lease in writing. If he doesn't sign, then boot him. If he does sign, then hold him to it. Charge him the late fee. Give him the five day notice. And if he still doesn't pay, then start the eviction.
He's got the money. He's just choosing not to pay it to you. As it stands, he's coming up with the rent by the end of the month every month. So he clearly makes enough money. He just has to save up one month's rent so he can pay you the rent on the 1st when its due instead of at the end of the month. IF he did that, he'd be on time every month going forward.
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@Lisa Marie I've been in your shoes! Before I had rental properties, I rented out extra rooms in my personal home. My very first roommate was a friend. He was terrible with money and always late. I would see him always going out to eat though. His dad always paid his way, so he didn't work much either. So I found myself resenting him.... I wake up and go to work and see him asleep on the living room couch. I come home, and he's still there. I had to get a little firm with him as tough and awkward feeling as it was....firstly that he couldn't just be on my couch all the time when he had a room to sleep in.
Do you have a written lease? When does it end? If it's verbal, I assume it would work like a month-to-month lease and you give him a 30-day notice to vacate. No matter what, things will be uncomfortable for a while. Try to keep your emotions in check. Just stick to the business side of this. If he gets emotional, let him, but don't participate back. Once he moves out, you two might be great friends again! When my friend moved out, our relationship got back on track. You find that you don't have the same values and priorities in life, and that's okay. It doesn't mean you aren't friends. Or sometimes if feelings are that strong, perhaps it does. But all will be fine.
Send your official notices in writing. If you have talks, follow them up in writing. Check your local laws, but eviction process might be a little different/easier when it comes to your primary residence.
Wow! I really appreciate all the advice and perspectives. You guys are such an awesome community. I couldn't help but to vote on all the responses.
So to clarify, I did not have a written contract. It was indeed a month-to-month verbal. However, I will have a contract to sign when I speak with him tonight and state the terms. I've been giving myself a pep talk on not being emotional and to stay friendly but assertive. I think it's very reasonable to give him the choice of either accepting it or choosing somewhere else to live. I feel very optimistic when some of you guys mentioned that you can shape the habits of late payers too.
I appreciate the insight on how evicting will completely terminate the friendship and make things awkward with a live-in tenant. Would I still do house hacking again? Probably if I was way younger, but as I get older and am starting to settled down with my partner I don't think this opportunity will happen again. I will update you guys on how it all went down!
One of the reasons your brother wants you to evict him is because he is your brother and you are living with a guy. Enough said, you will always get that opinion from a brother whether he is using you or not.
You didn't mention whether this is causing you any hardships so I presume it isn't. It just sounds like you are frustrated with him not communicating with you. Sure it sucks that he isn't forthcoming, is this frustration enough to lose a friend and what will your other friends think of you for doing this?
You set the ball rolling by not making a fuss the first time this happened, now he is fine paying you but it isn't a priority. Him gradually moving his payments to be paid in by the end of the month ultimately may let him get away with a free month of rent.
If it bothers you enough to lose a friend, kick him out. If not, set some boundaries with him and keep working on it.
Originally posted by @Brian Schmelzlen:
Yes, you definitely broke the rule about rooming with friends. However, that is in the past and you cannot undo that now.
It sounds that although you are very upset with him, you want to maintain your friendship. I also agree with you that he is taking advantage of your friendship.
It is probably not the worst idea to evict him, but I am going to answer this going with the thought that a flat out eviction will potentially end the friendship and you don't want that.
Therefore, in your conversation with him you need to politely but firmly inform him that you have issues with how things have been and want to formalize the landlord/tenant relationship. Inform him that you plan to have him sign a lease (I am guessing you don't have one in place since he is a friend; if you do you need to revise and/or enforce it). Also tell him that there is going to be a penalty clause in the lease for late rent payments with whatever grace period is required by Texas law, if any. I would suggest having an actual attorney draft the lease for you.
If he doesn't want to sign the lease that is fine; he can move out. If he does, you do need to follow through and enforce it; it doesn't do you any good if it is just a piece of paper that you both ignore.
Great suggestion, and great perspective on resetting the rental agreement between the two of you while still leaving the door open to maintain the friendship.
If there's a written contract follow what is outlined in the contract. We use the word friend too loosely... What kind of friend would knowingly take advantage of you and this situation? You may have shared interest and may even have good conversation but a friend doesn't treat a friend like that
Suggest you inform him that he is expected to move out and it was a business arrangement. Do it in such a manner not to hurt people's feelings.