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I plan to rent my parent’s house (3 bedrooms and 1 bath) by rooms to students. The rooms are minimally furnished. My parents have never lived in the house. It has been vacant for a few years. I asked for $400 per room per month plus shared utilities and a deposit $400. I plan to rent month-to month. There are two people who contacted me so far. There is a good chance that I will end up with one tenant or no tenants at all since the school begins in mid-September and most people have already found their housing. Here are my questions.
1. Do I need to do background checks, and therefore charge an application fee in my situation?
2. My main question is about TV and Internet. I do not want to sign a two-year contract with Verizon or Charter. It is expensive here in CA, close to $100 per month after the introductory rate. There is a 32’’ nice TV in the house. Is it better to remove it and let the tenants(s) take care of their Internet/TV needs?
3. Utilities part is also confusing. I plan to pay some amount for watering the lawn and for the gardener. If there is one tenant, should I pay 50% and let the tenant pay 50% of all the bills? Should I call the utility companies and ask to do billing starting on a specific day, like on the first of each month?
I am new to this. Any advice is appreciated.
Thanks!
If I were you, I would sale. Renting can be quite an obligation & time consuming.
I know a man who has rented apartments and duplexes to college students for years, but, that is an entirely different ballgame than renting 'rooms.' Over the years, he has learned to incorporate many 'protections' into his lease (learned through expensive experience) ... and has reached the point where he has pretty much got a handle on the many problems.
If you have ONE tenant and lease, whom you allow to sublet to other tenants, you at least have ONE point of responsibility. You will open a huge can of worms, by renting the same property (rooms) to multiple tenants with multiple leases. For example, who is responsible for damages? What happens to your rent when one or two tenants move-out (or more move in?, Whom is responsible for excessive, upaid water, electric and cable/internet bills? -- Further, check your zoning to ensure that you are zoned for a 'hotel' or 'rooming house.'
Wow, this is actually something I had planned to do with my parents' house until Katrina ruined my plans! Then, I was actually the poor college student looking for a room. Well, here are some suggestions from my experiences:
1. Rent to responsible students; ask for references, do a background check, talk to their parents, etc.
2. Have someone you trust living in the house to supervise your renters, a dorm mother or RA. Make him / her responsible for reporting damages and such to you. This should be someone you know, and this person should have separate living quarters in the house, such as the basement or attic. Usually, this person gets a free or reduced room in exchange for looking out for the property.
3. Organize a few little activities to keep everyone from getting bored. Convert the garage into a home gym. Install a swimming pool. Set up a theater room with hidden equipment. Then, don't worry about charging a lot for one room. You would be surprised how inexpensive it can be to add quality amenities.
4. Include internet and utilities in the rent; a fluctuating bill can confuse college students. You can find ways to forcibly limit consumption, if necessary. College students don't need TV as much as they need a reliable wireless internet connection, but you should at least make the place "cable ready" in case someone decides he / she wants cable TV. Again, you make a lot of the choices. Don't let them all choose a separate provider, and don't let them all get separate accounts. Students don't always use common sense, and they like it when it seems like someone is looking out for them. Also, make sure it is an unlimited, high speed internet connection with Wi-Fi, as most students use laptops and other wireless devices.
5. Find a way to charge only one set fee to each student. If one student moves out, do not make the other two responsible for the rest of the rent; that's just cruel. Since it's one bathroom, the "one responsible tenant with the option to sublet to others" with approval and background checks from you is a good idea. You may also want to provide hints and tips for successfully sharing the bathroom.
6. Don't do thorough credit checks. Sometimes the most needy are the most responsible, and credit checks bar them from being able to apply. International students typically make great tenants, for example.
7. If you doubt your ability to draw up a sound rental contract, which should include a clause for damages holding the student solely responsible for damages that are determined to be his / her fault and a clause that makes the parents responsible for paying said damages if for whatever reason the student cannot do so, hire an attorney or legal expert to provide advice. You do want to protect yourself from legal savvy parents who side with their children and disagree with your policies.
8. Keep a security camera in a few of the common rooms if that's allowed, and make your tenants aware of this.
9. Don't expect to make money off of your tenants at first. Like any good business, you need to gain their trust, soothe them, and make them feel at home. Once they trust you, they will tell their friends about their experience, and then you will get more business.
10. Charge for anything and everything upfront. Have due dates for the rent and penalties for not paying on time. Do not let the students forget; they will if you let them. Also, make sure there are no hidden fees, even if that means having to charge each tenant more than you originally planned.
11. Allow pets, but take a pet deposit, and charge pet rent. Thoroughly outline which pets are allowed and which are forbidden, and conduct routine inspections to make sure the students are abiding by your policy. You can allow only outside pets if you don't want animals in the house, but allowing pets in some form with make you stand out from the crowd, as most places that rent to students don't allow pets.
12. Supervise whenever you can, but do so in a way that your tenants do not feel uncomfortable. Try to make friends and welcome them. Drop in on the weekends to see how things are going. Give them the impression that you are checking on them, not the house.
Land lording can work but the situation you are describing is not setting you up for success. If you must rent, rent to a family, rather than students with that house.
Worst case: one crazy will have a party that totally trashes the house and you will have to spend thousands of dollars to fix the damage or it will be a code violation. I cleaned up one of those for a landlord for free rent for a semester while I was in college, plus I had the skills to make the repairs, but you probably won't be as lucky.
Noone else has mentioned it but are you sure it is legal to do what you want to do? Some cities/towns have restrictions or rules based on tghe zoning on how properties can be rented out. They may or may not allow 'rooming houses' in that neighborhood. Also some college towns have specific requirements about safety or habitability in student housing.
The other advantage of leasing to one person is that person will recruit other tenants and will supervise their behavior. You want to limit the number of occupants.
My daughter lived in a rental during college. Although all of her room mates were women it was obvious to me that the residence experienced a lot of wear and tear.
This has indeed taken off across the country. And is now a big business.
In the "Purpose built student housing brand" students enjoy the amenities, the distance from the actual campus and owners enjoy the per room rate...or per bed rate. And the college enjoys one less thing to pay for and worry about.
The larger ones with larger number of students offer the following. And you can tweak from there: Students only, fully furnished, $500 per student, $90 electricity allowance, cable, water, sewer, trash, smoke free, flat screen tv in common area (like the usual apartment living room), modern kitchens, salt water pool included, walking trial, etc. shuttle bus to college. They are on the bus line. A really large number with schools with shuttles will be shuttled regularly back and forth.
Must have valid student ID at lease signing and must provide quarantor or pay lease term up front. NO families allowed. Individual leases.
From there, figure out what you offer.
Do check your muni rental requirements for private homes though. One of our areas only allows two unrelated people in a home and, nearby, only three unrelated people.
The way they do it in my prior home town (two universities, 50,000 students) is that they rent to one individual, with a clause allowing subletting. You don't want to be having to collect from various individuals. You want one individual responsible for payment of the rent, responsible for the home, etc. remember that you want to KISS (Keep it simple...).
Will it always be the case that you can find one with enough income that they could pay the rent single-handedly if needed? Their commitment to be responsible for the entire rent is not really useful if they couldn't afford it.
Quote:
Originally Posted by Restrain
Be sure to include a clause requiring the tenant to comply with all applicable city ordinances and that the tenant is responsible for code enforcement violations that do not involve the structure (yard waste, mowing the yard, etc). If you want a yard maintenance company to take care of the site, be sure to put a clause in for accessibility of this company and set your rent accordingly.
The local board of realtors may have a form you can use.
Finally, buy an hour of time from a lawyer to be sure you are covered (liability, rental collection, evictions, etc). Best money you will spend.
Being that it is not YOUR property that you are arranging leases and taking deposits for,
you should determine if you have to be licensed to do what you are planning to do.
Also 1 bath for three rooms is going to be a problem.
Not with college students. That's far better than what I had in college
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