I'm looking at buying a 3 bed in London (new build) and thinking of renting out the other two rooms to people I know.
Anyone done this before? Any frustrations living with your tenants?
The rental income should cover the mortgage/service charges/some of the bills... So I'd be living in London essentially for free while people pay off my mortgage...
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I did as a tenant - it's a good friend of mine (if not my best friend), the arrangement was as follows:
- I would pay just a bit below market (c.10%) given that 1) he was not taking a risk on me damaging the property 2) I would respect his set of rule (which were very lax but with some odd ones) 3) he had better visibility on when I wanted to move etc 4) given that I am his friend it's an incentive for me to live there as opposed to elsewhere with random flatmates
- I would not deal with the bills / and other stuff given that it did not matter he'd pay them anyways
However before I agreed to move it I made sure that 1) he was able to sustain mortgage payments without a tenant - i.e. there was no key man risk for him should I leave else I'd feel bad if I ever moved out (which I did eventually), 2) while no contract was signed there was a gentleman agreement that I'd pay on time etc (for tax reason amongst other stuff) and 3) I was able to move out anytime as long as I did flag it early enough (I think it was 30 days notice)
great info.
that is a good point on knowing they won't damage the property. I will charge them a bit less.
what were the odd rules? I need to ensure these guys take the trash out because I know theyre lazy as hell
Did this but in a city where I didn't really know anyone, Craigslist roomies. Good setup as I wasn't paying anything into my mortgage, but my tenants were as follows:
1. Great guy, had a 3 wks on 1 wk off job so basically used my house as a laundromat, super clean, chill, and left to go camping when he was off work.
2. Crazy chick, quit her job the day she moved in, ex-husband paid me the rent. Up all hours of the night, drank my booze, ate my food, tried to bang me (looking back I should have done it for the lols), brought back dudes, chicks, whatever. Ex quit paying her (nothing legal as they weren't formally separated), and she packed her shit and moved across country the next day
3. Dude that told me over and over again about how he was a christian, man of god, etc. I don't really care but it was so emphasized I was like okay this guys probably a pedo but money is money, took a chance on him. Pre-paid me for 2.5 months of rent, showed up for 1 day, didn't see him for like 5 days so I texted him to see if he was okay, he'd checked himself into rehab, wouldn't accept the money back, left all of his shit and never picked it up.... finally went and took a peek through his shit and it was like a few sets of clothes then pills and needles.
Doing it with people you know will be much better, I agree with the poster above make sure you define rules and expectations, if it's friends you know they should be giving you plenty of heads up if they do move out which is nice for keeping continuous renters. It sounds silly but even things like "no dishes in the sink" are good to make sure it's understood.
Lastly, do not buy more than you can afford without renters, I was not in this situation more or less just greedy so always wanted renters, thus the craigslist homies. If you buy more than you can afford you will wind up in the same situation and will drop your standards for people you would live with, and will end up with crackheads squatting in your house.
hahaha.
great stuff.
I rented out the second bedroom in my two-bedroom apartment to a good friend of mine. We moved in when the apartment was still unfurnished and I dropped the rent for a couple of months, didn't ask him to pay a deposit and didn't ask for any money when I had his room painted after he moved out. Worked out quite well for about 3 years before he moved out.
Two moderate issues came up during that time:
1) He wanted to move in with some other folks about 6 months into us moving in together, and seemed unaware that there was a 3-month notice period in the rental contract. I partly have to take the blame, because I didn't make it clear that I was adamant about that clause specifically (didn't want to pay the full mortgage for two months looking for a new tenant roommate). Ended up staying, and gave me 3 months notice when he ultimately moved out.
2) A couple of weeks in he started having his girlfriend over a couple of nights per week. After 2 or 3 months she basically stayed with us 6-7 nights a week. I never brought it up, but I feel like that should have been something to discuss between roommates (it didn't necessarily bother me as a landlord, since water & electricity aren't super expensive where I live). Either way, may be something you'd want to consider.
For me, the lesson to be learned is that you have to communicate your expectations very clearly up-front. Let them know what amount of notice you require them to give you when they move out etc.. Other than that, things like agreeing on when to take out the trash should be handled the same, whether you're the landlord or not. Obviously its a great opportunity to buy the stuff you like (a nice TV for example) and to write it off as an expense.
Hey man, I manage a few of my rentals and I'd like to think that I do a pretty good job of it. I always have my tenants fill in their previous addresses and who their previous landlords are, phone numbers, how long they lived there, and why they moved. Double check these locations on the tax assessors website. Call on the landlords and talk with them about the tenant. Your two most important questions should be - "Did they pay their rent on time?" and "Did they take good care of the property?" Also, make sure to talk to them about the general business of being a landlord just to make sure the prospective tenant didn't give you a friend's number to vouch for them.
Get the tenant to complete a background check. www.rentprep.com can do the work for you and you can set it up for the tenant to pay for it. The most extensive background check is $38 and it's pretty good.
You're also going to want pay stub proof. Get them to send you their last two pay stubs.
When you meet them, it's a good idea to to try and see what the inside of their car looks like. If it's absolutely trashed, that's likely how they're going to treat the bedroom they rent from you (and possibly the public areas like the living room).
Now I don't live with any of my tenants, so you might want to meet them for coffee too and chat for a bit to make sure y'all will get along.
Is it a leasehold or a freehold? If it's a leasehold a lot of the time you can't let rooms, it has to be a whole place.
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