I am an empire building landlord whose attitude is the more the merrier when it comes to houses. My husband and I buy houses with great building blocks and watch the margins very closely. Our goal has been to buy houses that allow us to travel and live our life.
As a person I totally respect and recommend the roommate situation. When my husband and I first got married we had a roommate. Financially speaking, having roommates was one of our best decisions we ever made financially in the early years of our marriage. It allowed us to greatly increase our savings and ultimately allowed us to have a fully-funded emergency fund that allowed us to buy a foreclosure and totally fix it up. Since we were able to use money for our repairs from our salaries we used it to pay for our first few rentals. Having a roommate has its moments, but a good roommate lease goes a long way to making it very successful.
As a landlord, roommates drive me NUTS. There are more cars, more wear and tear, and honestly in my limited experience, there seems to be a lot more in-and-out movement. One roommate decides they get orders and off we go to do a new lease (especially in California you ALWAYS want to have a new lease). As a landlord this gets very aggravating and it’s lot of work.
I honestly hate saying no, especially if it is simply because I don’t want to deal with it. My way around this issue was to figure out how much it is worth to me. I came up with the number of $100 per month per roommate and a $200 application fee. Now I charge all rooms a $100 per month fee (similar to the pet fee idea) and a $200 application fee because you have to go through the entire process. This way I am rewarded for having to deal with it and they still have the option. It’s a win-win situation.
Here is the Wording I Provide in my Leases:
Roommates are only allowed with the expressed permission of the landlord a monthly fee and processing fee. Tenants are still required to pass the same qualification processes. The additional monthly fee is $100 along with a $215 background/credit check processing fee. If an unauthorized roommate is found, there will be a $1,000 charge along with the $100 monthly fee backdated to the start of the lease. So if the lease was started in January and an unauthorized roommate was found in March then the fee would be $1,515: ($1,000+$215+$100+ $100+ 100).
Love this wording “short cut”. Check out my new ebook with explanations and wording to all my addendum’s.
What has been your experience with roommates? Do you allow them and if so what are your policies?
I would like to buy your book, but your website does not give me any way to complete the transaction….help, please!
Thank you for your interest. I really hope you enjoy it. I am so sorry you are having trouble buying it. If you go to this link http://www.reluctantlandlord.net/everything-lease-addendum-landlords/ and click on the buy now link. It will take you to gum roads. This site should take you to a credit card at which point you should be able to buy the book. Please email me at elizabeth@reluctantlandlord.net if you are having any other issues.