Thinking Of Taking On A Tenant To Help With The Mortgage? Here’s What To Do

Thinking of taking on a tenant?

If you live in California and you bought in the last five years or so, there’s a good chance that you’re bordering on or are house poor, meaning you spend more than 30 percent of your income on your mortgage (or rent). Maybe you can take on a tenant.

If you’re over 30, having a roommate might seem a little…well…like you’re back in college. You’re right. It will definitely take getting used to, but if you do the right amount of screening, your tenant/housemate can make a wonderful addition to your life.

1. Figure out the price: Check local listings for comparable neighborhoods and rooms. A room that has its own entrance and bath will go for dramatically more than one that doesn’t. In a single dwelling, including utilities might be easiest, so you would want to account for that.
2. Put an ad in Craigslist. You aren’t limited just to Craigslist anymore. Facebook has several groups for home shares. You can also post within surrounding neighborhoods in Nextdoor.
3. The next part may be the hardest. Obviously, you want to meet any potential housemate before letting them move in, but you should also ask them to provide a credit report. They can get theirs for free while it would cost you, plus you’d need to get their authorization. Find out how they spend their home time. Do you want someone who stays out of your way or do you want someone who hangs out with you? Do you have chemistry? Do you want someone your age, or perhaps someone younger or older. All three options have their advantages. Here is a link for a free rental application.
4. Once you find the right person, have them sign a lease, but you might want to think about a month to month lease, simply because you can’t be sure that you’re really compatible with a housemate until they’ve actually move in. With month to month, all the terms are still spelled out, but either party can end the agreement with 30 days notice. Trust me, 30 days with the wrong tenant is far better than a year.
5. Specify rules. Do you want to share cleaning duties, put that in writing. Make a schedule. A laundry schedule is definitely recommended. If you are early to bed and early to rise, specify quiet times.

Another option is to rent only part of the time with a service like Airbnb, which might mean more work for you and some strangers taking over your home, but it will be short term. Of course, the upside to a long-term tenant is company, if you choose to see it that way.

Featured image via FreeStockPhotos.