More people than ever are thinking about renting a property to make their home, rather than purchasing outright. These trends come and go, but currently represent a sizeable opportunity for those who want to rent out a property as a landlord. As certain segments of the workforce find it difficult to qualify for either a mortgage or a rental apartment on their own, so another trend has emerged. Now, more than one person may opt to live together in a "roommate" situation, rather than occupying the property just by themselves. If you want to cater for this sub-segment of the market, what do you need to bear in mind?
Do You Qualify?
Firstly, your rental property needs to be large enough to allow for this type of habitation. You will need several different bedrooms and at least two bathrooms, if they're not ensuite. Then, individuals can retreat to their own part of the building, while sharing common areas such as the living room, dining room and kitchen. If your property qualifies in this way, you will need to set out some clear guidelines to all prospective tenants before proceeding.
Start out As You Mean to Go on
Sometimes, potential roommates can be good friends and have decided to pool their resources to live together. Other times, individuals find potential rooming partners through different websites. In all cases, though, you need to set out fully and clearly in the lease what each individual renter's responsibilities are. You should never rely on verbal agreement between "friends," as anything can happen and relationships can go bad.
- Don't rely on collective screening and make sure that you have a good look at each potential tenant on their own merit.
- Verify the individual's income and make sure that their rental history is good.
- Never get into a "he said, she said" situation when it comes to any potential damages. Let all tenants know that they are jointly liable for damages during the tenancy and explain how they should maintain the property.
- Further clarify the due date for the rent and how long the lease is for.
- Each tenant should put forward a security deposit, no matter how closely related they may be.
- Each person also has to sign the lease individually and assume full responsibility by doing so.
- Collect damage deposits at the outset and only return them when the overall tenancy ends, even if one person should leave early.
Getting Help with Management
While more opportunities may come along in this particular market, it can be more complex to manage. This is why it's a good idea to have a property management company at the helm, as they'll be able to create the paperwork, get all the signatures and administer the program perfectly.