Before taking on roommates, you will want to think realistically about the financial implications. Rent stabilization and rent control laws can limit how much rent you can charge your roommate, so it is is very important to check your local laws. The law may also dictate how the rent is divided. For example, you may be required to split the rent evenly, even though one of the bedrooms is more spacious than another.
In other areas, the landlord may set the rent amount without any restrictions. You may split the rent evenly, or you may choose to charge different amounts based upon factors such as square footage and amenities used or income.
You may also want to increase or reduce your roommate’s rent based upon some other factors. As the owner, you will be paying for maintenance and repairs, property taxes, and the mortgage. Conversely, you are able to deduct qualifying mortgage payments, improvements, and expenses on your taxes. In some cases, you may want to make arrangements for one of the residents to receive a discounted rental rate in exchange for extra chores performed. All of this will help to figure into what amount to charge, and whether you are making any money in the end.
Rental income is not the only advantage to bringing roommates into your home. Having a roommate means that you will not come home to an empty house at the end of the day. If you travel or occupy another home, a roommate will keep the lights on in your property to keep it from sitting unoccupied.
Writing the right lease
You will notice that the ezLandlordForms lease includes an optional Roommate Addendum. This is the perfect place to list the rules for your roommates. Try to be as specific as possible to head off issues that may emerge later. As always, check that any restrictions are allowable by law in your area.
Our Roommate Addendum includes some suggested clauses that should be in every roommate agreement, including:
- Break lease provision – This prevents people from trying to move out in the middle of a lease term.
- Administrative fee to add a roommate – This fee will help to cover the time and effort required to add an additional roommate.
- Security Deposit Accounting – It is a good idea to spell out how the security deposit will be paid and refunded in the event of an early move out or at the end of the lease term. Addressing this a the start of the tenancy will help avoid disagreements later on.
You may want to modify this fully-editable document to include some other terms specific to your situation. Some issues to consider for your roommate’s lease:
- Definition of shared spaces
- Responsibility for shared costs, such as cable or wi-fi
- Guest policy, including overnight guests
- Quiet hours
- Food purchases and storage (Be sure to address whether food will food be purchased jointly or individually)
- Cleaning and maintenance responsibilities
Every house and area is different, so add special terms that apply to your situation.
Roommates certainly change the landscape of a living space. Your lease with your roommates should address all of those differences. Putting as much in writing as possible will help you and your roommate get off on the right foot with realistic expectations and rules to fall back on.
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