Screening tenant-roommates for first house hack

21 Replies

Hey Bigger Pockets Community! I am working towards settlement on my first home purchase! Settlement is set for early November. My plan with the purchase (a 4 bed single family in Philadelphia) is to rent out 3 of the bedrooms while living in one. As I am a young single female, first time home buyer, AND first time landlord, I am seeking some advice on how to properly screen potential tenants/roommates. I work at a nearby university, and as such I have access to an off-campus roommate search platform that only students/grads/staff/faculty at the university can access, so this is where I will start with my search. However, November (mid-semester) is not exactly the busiest move-in time. Therefore I may have to utilize other search sources (Craigslist, etc.) to fill all 3 rooms. I am anxious to get started on my search to make sure I get good tenants ASAP, but I also recognize that any number of things could go wrong between now and settlement, so I don’t want to jump the gun and promise a house to 3 people only to have something fall through! So my question is 2-fold: 1) What are your best tips for a young single female/new homeowner/first time landlord in an urban neighborhood for screening tenant-roommates (several factors in that question!) AND 2) What is your advice for timing the tenant/roommate search while waiting for settlement?

1. Wait until you close before advertising it. You can't really show it or negotiate contracts on something you don't own.

2. Screen every applicant. Systems like Cozy.co or Tenantcloud.com will help. There are a lot of different screening services available.

3. College students present a higher risk because they are immature and lack experience with finances. Mitigate your risk by requiring parents to co-sign and take responsibility for anything that goes wrong.

4. Shared common area is a recipe for disaster so have good policies and enforce them. Who's going to clean the hair out of the shower drain? Who ate my leftover pizza for the 17th time? Can you turn down your music while I try to study? I want to have six friends over for dinner Friday night and need the kitchen, dining room, and living room.

Personally, I think it would be far wiser to hire some help with a lot of this so you don't make a big mistake. Find a property manager and let them run it for a year while you get settled and learn the ropes, then you can take over.

@Nathan G. I really like your idea of hiring a property manager just for the first year. I initially had the "DIY" mindset, but I can always switch to the DIY way after a year of learning the ropes. I appreciate this and all the other tips - thank you!

I own a house in a somewhat sleepy beach town in Florida, so this might not be entirely applicable, but I'll list my tips and lessons learned. My house is a 4 bedrooms as well, I rent 3 bedrooms out. I've been renting the rooms out for about a year and a half. Sorry if this reply is a little unorganized. Just adding things as I think of them.

*When you put an ad on craigslist, make sure you are specific on the rent cost and the utilities cost (if not lumping together) - I usually do $100 utilities/person but this is based on an average of the monthly utilities over the year. You can split utilities as they come in, but that's too much of a hassle to me, plus people like to have a hard number they have to pay every month so they can budget. 

*Explicitly state that you will be performing a background and credit check on anyone interested. This usually weeds out the undesirables and I've found that those that do have some issues in their background/credit will be upfront with you so you're not surprised when the check comes back a certain way. Also make sure to ask for a copy of paystubs so you can see if they can actually afford the room.

*I also put a line at the end of the ad saying something like, "Please reply with your name, age, profession, and how long you'd like to rent the room for or reply will be ignored." I get SO many replies with "Is this still available?" Helps to weed out spam and obviously people who are just too lazy to read the whole ad. I actually have all guys renting rooms, it doesn't bother me since my room isn't even on the same floor as them and I have my own bathroom. For whatever reason, it's easier to find a guy to rent to than it is to find a girl. The only girl I ever had rent from me ended up being a drama queen, so I was relieved when she told me she was moving out.

*When someone inquires about the room, if you haven't already stated it in the ad, make sure you are upfront about the rental situation (i.e. how many people live in the house) and how many people will be sharing a bathroom! You will be surprised at the amount of people that assume they get their own bathroom if you don't say otherwise.

*Make sure you have enough parking space! I once had a couple living in the same room (the master bedroom) and that just messed up my parking situation. I have had several issues with the mailman because my roommates didn't understand (even after me telling them several times) that they won't deliver if they park too close to the mailbox. Also have them be mindful of sprinkler heads, etc if parking on grass (I have a strip next to the straight driveway that works for extra parking).

*This also brings me to my next point: be VERY wary of renting to couples. And if you decide to, upcharge them at least $200 to cover hassle and extra utilities. I only had one couple and they were fine overall, but it was just too much hassle in the end.

*If you have carpet in the bedrooms, try to enforce something about cleaning. I planned on ripping the carpet in the bedrooms out anyway, but I basically filled up a whole cannister in my vacuum after having that couple in the master bedroom for 9 months. They didn't vacuum ONCE. This also goes for general cleanliness.

*LEASE AGREEMENT. Find a template online and make sure each person signs a lease agreement. You can also input house rules on here as well, so everyone will know what the rules are when they sign the lease. I usually do a minimum 3 month lease with month to month after, first and last up front with $200 security, and explicitly state that they must give me 30 days notice (in writing, like a text) prior to moving out.

*If the tenant is bringing their own furniture, be specific about things in common areas. I had a tenant bring in this bulky kitchen island cart with an espresso maker that he never used. It was super ugly.

*In addition to craigslist, I advertise on my alma mater's ad forum, my work classifieds section, and the next door app. I tried facebook, but again, got too many of those "is this still available" and deleted the ad. I have found tenants through all but next door.

*Tax reporting. This is up to you, I won't try to swing you any way. One thing I want to note is that if you plan on buying rental properties in the future, it is within your best interests to report the income so you can PROVE that you've been a landlord. The lease agreements help with that as well. Also, the extra income can help you better qualify for another loan if you need it.

*Insurance. Make sure you reach out to your insurance agent and ask if there would be any policy changes if you decide to rent out the rooms. My agent only mentioned that my tenants' belongings wouldn't be covered under my insurance if anything happened, so they should get renter's insurance. Again, this is up to you (and them).

*One last thing (for now), I admit to being judgmental when getting replies. If their grammar is poor, I ignore it. Extreme run-on sentences, little to no punctuation, sentences not capitalized, and lots of misspellings. Most phones have autocorrect and will automatically add periods and capitalize words. If your reply is that bad, what else are you that careless about?

Hope this helps you!

I'll say one thing - you got guts. That's not easy to do, and not just because you're a young female. I wouldn't want anyone else living with me. 

Paramount for you is to screen everyone hard. I wouldn't place any ads on Craigslist or similar - I would probably focus first on mining resources I already have - where I work, go to school, friends & extended family, etc. Craigslist is a magnet for a lot of creepy people. I doubt a property manager is going to take this one with you occupying one of the rooms, and even if they did, do you really want a stranger picking your roommates?

*IF* you can get people of a similar demographic as you, it will probably be useful, as you want people that like living the same way as you - otherwise, common areas are going to be big stumbling blocks. 

PS: Do nothing until you take control of the house. 

Oh, another tip. I got an electronic lock/keypad for the front door. I give each tenant their own code to get in, and when they move out I delete the code and program a new one for the new tenant. The locks run about $100 at Lowe's/HD.

Hey Samantha congrats! You DONT need a property manager, especially if you are going to live in the house. Who will take care of it better than you? Waste of money in my opinion. 

With your position in the u iveraitycommunity, you should be able to find great tenants, but the timing is crucial it seems. Craig’s list add should be crafter with CARE, and yes you should start right away, even if moce in is months away ( better tenants plan longer ahead).

If you need helping crafting your ads or anything else let me know, Ive owned and fix up rentals And house hacks in philly for 10 years now. Message me directly!  Good luck!

Tim S. 

Www.revive215.com

@JD Martin Guts and optimism! :) Haha thank you! I certainly anticipate many challenges along the way, but my goal is for this to be a great investment (financially and educationally) and I am looking forward to the process!  Thank you for your advice!

When it comes to renting rooms in the house I'm living in I always give a little below market rate and rent to my friends, I'd much rather make a little less to live with people I really like for quality of life purposes. Warning: this can definitely be friendship ending depending on how easy you/they are to live with though! Haha It might be less of a headache for you to advertise as 3 bedrooms and look for a group of people to sign one lease instead of trying to fill the bedrooms individually with different start and end dates. You also might consider trying out Air B&Bing the rooms at first before anyone is in a lease moved in, to see what you can get doing that, easy to clean between guests if you live in the property and depending on what part of Philly that could be much more profitable.

My advice in no particular order:

Get an attorney to write or review your lease to make sure it is state specific.

Only use month to month lease so you can add rules or get rid of them if necessary.

Write a very comprehensive list of house rules that must be abided by as apart of your lease. Look through the forums and read as many roommate stories as you can to find what rules they wish they had added.

Create a list of screening criteria that all tenants must pass. Examples: must have monthly income of 3x rent, must have credit score above XXX, no prior evictions, etc. You can find lists that other investors have used on the forums, but you may need to lower your standards since room rentals can tend to be lower quality applicants.

Above all else, look up your local landlord tenant laws and read them front to back. Print it out and keep it by your bed. You need to know all the laws surrounding this business. You must know a lot of stuff before you need it.

Also, make sure you look up your town ordinance to see how many unrelated people are allowed to live in the house. In my town, it's 4. This might be specified under the definition of "family" in the municode. 

With whomever passes your screening and becomes your roommate, stress to them to come to you with any issues as soon as possible. I have had issues come up way down the road that could have been handled had I known about them right away. For instance, one of my roommates told me about the clogged sink when it completely stopped draining, straight up standing water in the sink. Apparently this had been gradually getting worse over months. Got a plumber in there, and he took out a 3" piece of wax from the pipe... he said it was likely hair gel. Told my roommate to stop washing his hair gel down the sink lol.

Another issue I've had is laundry detergent. Make sure everyone buys their own and label it! It sounds dumb, but you don't want to go do your laundry to find out that you're out of detergent because your roommate was too lazy to go buy his own.

Also, try not to take responsibility for anyone else's belongings, if you can. For instance, if they have a bike or kayak, if you don't have an extra spot to store, make sure they know that! I've had a roommate blame me for his bike chain getting rusted because he had to store it outside, when he bought the bike after he moved in with me. Also had someone else that bought a kayak after he moved in and blamed me for lack of storage when the handles broke off (which was more likely due to him not rinsing it off after use than being outside). 

These things aren't what you'd expect going into house hacking. Issues come up, you learn from them, add to the house rules, and move on.

@Samantha Miller I was actually in a pretty similar situation as you a few months ago. I had already had my house for a year so I didn't have the timing issue but I have a 4 bedroom 4 bath house in Auburn Al and it's my first property/investment/house hack, because I'm living in one of the rooms. I'm not sure what the demand is like where you are for housing but in auburn it's great. All I really did was put my place on Facebook marketplace and zillow and I got plenty of people inquiring. For me one of the biggest thing when choosing tenants/roommates I had to make sure I wouldn't despise them as a person. I'm sure that sounds messed up to a degree but you're going to be living with these people for possibly years so if they come off as immature or annoying or dirty etc don't look past that just because they might have the deposit and good credit. As far as you being in the middle of the semester I would say maybe it would be worth doing the vacation rental thing for a few months until until January when everyone subleases. Again idk what your area is like but I regret not doing that for my place in Auburn, because the football games here. Good luck!

@Aaron Millis Great point about the temporary vacation rental. I actually co-owned a cleaning business that had many vacation rental clients, and from experience in my area November-December is a time when many parents/families were visiting campus to see their college kids and help them start packing their things to go home for winter break. They would rent a room near campus for a few days as the nearby hotels are very expensive. It's something I can definitely consider!

@Samantha Miller Alot of great pointers here. Definitely go month/month lease so it will be easier for both parties to get out of a bad situation. Like someone mentioned above, you can weed out alot of bad apples just in the inquiries. Bad grammar and short incomplete inquiries will be red flags like, "Is this room still available, I need a place asap" = I'm being evicted or kicked out most likely. Or "When can I move in" that's it, no hello or introduction. I like TransUnion Smart move for background and credit checks. Make them pay, it shows that their serious. Collect a deposit when you find someone. If you get pushback on deposit or background/credit fees move on, they probably can't afford to live there, save yourself a headache. Once I narrow a couple ppl down after showings, I'll actually set up a Meetup individually for a coffee. It's a chance to hopefully get a picture of someones personality since you will be living together. As several mentioned, have a list of all the expectations available or at least cover them to save awkward moments after someone has moved in. All in all, treat this as a normal rental. All paperwork, screening, whole 9 yards. Screening is KEY in this situation. If you screen well and are a good judge of character, you should be ok

@Samantha Miller This is a really ambitious plan that I am sure you will look back on 5-10 years from now, and know that it was an amazing decision. I'm in the camp of not needing a property manager when living in the property. The concerns that Nathan brought up are not unique to investment properties or  house hacking. Those are just issues that come with living with other people in general. Good luck with your search!

@Jared Aquino Yes! Found a great roommate. I did as everyone suggested: called references, asked about rental history, employment, etc. She was from out of state so we did a video call. I got lucky, she was great. Stayed for a year, paid on time, never a problem. She just moved out recently after getting accepted to grad school. 

@Nicole Marshall Hello Nicole. This is all amazing information. Awesome idea about the electronic lock with individual codes. Have you ran into any issues with tenants disturbing other tenants or your self? For example playing loud music at night, trying to throw parties in the house? How have you dealt with this/what steps have you taken to Mitigate these issues from arising?? Thanks so much