DaveF

Thoughts on having a roommate in your own house?

I'm thinking about getting a roommate. Not a big deal? Well, it's for the house that I own, which is new all around for me. Aside from the finding of a good roommate, I'm wondering how formal to be with the process, particularly whether I need an actual rental / lease agreement?

I own Pacific Heights, so I know just badly this could go but the reaction from a few people so far, including my house-closing lawyer, was that a lease is overkill.

I will also be paying taxes on the income from renting (my dad is my accountant, who also worked for the Feds for 25 years, and I can't do it under the table). Any experience with minimizing the tax burden for rental

Any stories, good or bad, about renting propery you own? Or just interesting roommate anecdotes?

Kirk Gunn

I've had very good luck in the past (way past) with roomates, but they weren't in property I owned. Granted, I had a few boneheads also, but I purged them from RAM.

I believe if you are the property owner of a single family home, and are residing in the premises, you have much greater leeway in choosing a renter, then dissolving the rental agreement if things "go south" in a bad way. I don't believe "equal opportunity, etc" play a role.

A consultation with a real estate attorney may be in order to confirm this for your area. Good luck, I'm sure the extra income will be nice !

Patrick Sun

I think it depends where you are in your life.

When I bought my house, one of my co-worker who travelled alot was looking to lessen his rental costs, and I thought the extra money would be nice to have in the beginning as the mortgage payments were coming due, so I was okay with a roommate, but then roommate re-located out of the state, and I decided I was done with roommates. I like not having to put up with anyone else's crap when I'm home, so I've opted to stay away from a roommate situation, and after re-financing my mortgage a few years ago, my peace of mind was worth more to me than the extra amount I had to cover without the renter's income I was receiving when the roommate was living with me.

So, it depends on whether the extra money you get is worth the hassle of dealing with another person in your own home.

I know some home owners who have roommates, and it works out well for them, so the social dynamic has to be a good one for it to work in the long term.

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Andrew W

Perhaps you could reduce rental income by asking the roomate to pay all the bills and give him an appropriate adjustment on the rent.

Andrew in Austin

Mark Sherman

I'm thinking about doing the same when I move ino the house I just bought. Lay down the ground rules and what you expect out of him/her. If they dont comply to the rules that you set......SEEYA.......TIME TO GO.

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Jason Kirkpatri

One thing to consider is that NOBODY will be as anal as you will be when it comes to your house (especially since it's brand new).

If you find that little things get to you, a roommate might push you over the edge. Those crumbs on the counter, the hair on the bathroom floor, the dishes in the sink, the noise late at night, the refusal to help with the yard work, the roommates weird friends, the lack of dusting, the inattentiveness to general cleanliness, the constant talking on the phone, the inability to take out the garbage, the "borrowing" of food (yes, I'm talking from experience ).

If you can handle it, awesome. Being a brand new house, I dunno'...

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DaveF

While not a serious concern, since I'm looking within a pool of sensible people, a tenant has significant rights, and can make it very difficult for the owner, if they want. (see Pacific Heights) I'm trying to be as sensible as necessary.
That's a good point. I'm pretty easy going, but some things do annoy me. I do plan to check one or two references.

As for yardwork - they're paying me so I won't ask them to do significant chores. Just keeping their part of the place clean, and sharing in the cost of consumables.

Being a brand new house, the $$ would be helpful...

An option others have suggested. I need to give it some thought.

Jeff Ulmer

This is illegal (tax evasion) if you are not declaring the money being given for these expenses. Having a renter pay the bills is the same as taking the money and paying it yourself from an IRS perspective.

On the plus side, you should be able to deduct interest on your mortgage, part of any non-capital expenses (carpets, paint, fixtures, decorating), etc. Talk with your accountant about what you can and can't deduct.

Personally, I would prefer not to have a renter, unless your house is set up so you can get completely away from each other when necessary (and it will be necessary). There should be some form of agreement, otherwise you may find (among other things) the rent isn't paid on time, living arrangements change (ie someone else moves in or becomes a permanent guest) etc. You want an easy way out of the living arrangement if it becomes unmanageable.

You should also inquire with your insurance company, since you will at the very least need additional liability, and your premiums may increase due to an increased security/damage potential.

Having extra money for expenses is good. Winding up having another person interfering with your social life in your own home isn't.

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DaveF

Hadn't thought of that. Thanks for the other insights.

I've had very good roommates over the years, and I'm generally looking within a "select" group of people with whom I've had good experience (friends of friends and graduate students), to mitigate the risk of a bad apple.