Property management renting to roommates

Renting to Roommates… A Recipe for Disaster?

As an established property management company, we often get questions from homeowners about assisting them in managing a room for rent within the existing owner’s house.  While renting out rooms in one’s own home has been a common practice for ages, it’s not something that many property management companies will assist with.  In this article, I’ll discuss some pros and cons of renting to roommates.

Who’s in Control?

When a homeowner hires a property manager, they are usually looking for someone to maintain complete control of the home on their behalf.  The property manager handles everything from collecting rents, dealing with tenants (good and bad), enforcing lease terms – including chasing late rent payments, and handling most or all repairs to the home.  Even without consideration of the roommate, when the owner lives in the home, more times than not, the owner somehow seems to get stuck handling these issues himself or herself.  While having the landlord deal with issues eases the amount of work for the property management firm, it doesn’t make sense to hire someone for a duty that you end up (intentionally or unintentionally) handling for yourself.  It seems impractical to pay a property manager for a service that they aren’t being required to do.

Tenant Relations

With a tenant in a rental home under professional management, everything goes through the property manager.  The tenant pays rent to the property manager, they submit maintenance or repair requests to the property manager, and if they have any special needs or requests, they make them directly to the property manager.  It is a common duty of a property manager to be the intermediary between the tenant and the owner.  When the owner also lives in the home, more times than not, the tenant will go directly to the owner with any questions or problems.  Again, this scenario makes managing roommates impractical for the property manager.

Tenant Disputes

When things go wrong with your tenant, this is when the homeowner really depends on the property manager to be in charge.  It’s the property manager’s duty to fairly and equitably settle disputes and keep the peace, whether the settlement is in the owner’s or the tenant’s favor; our job is to follow the law first, and the terms of the lease second, and everyone else after that.  If the tenant is not satisfied with our resolution, it’s our problem to deal with and is quite common in this business.  When the owner is living in the home and a dispute with the tenant arises, things can become very uncomfortable very quickly.  If it happens that you have two opposing or arguing parties living under one roof, it becomes almost impossible for the property manager to do their job without upsetting one side or the other.  Anyone who has been married for more than a few years and has endured a heated argument with their spouse knows how uncomfortable it can be in the days or weeks following an argument.  In a roommate situation, you can multiply the “uncomfortable factor” by at least 100, and expect that the time it takes to resolve personal disputes to last a long time, if not permanently.

Late Rent

In a normal property manager/tenant relationship, if the rent is late, we charge a late fee, and can be very strict about it.  Late fees exist for many reasons, and letting tenants slide or to be given a free pass on late fees only leads to the same thing happening again in the future, often repeatedly.  In a roommate situation, if the tenant is unhappy with our policy of enforcement, it’s entirely possible they’ll try to bypass us completely and approach the landlord for extra time instead.  Many times, the roommate will work hard to get the landlord to usurp our efforts at enforcement and will let the roommate have more time, often, mainly just to avoid conflict.  Anyone with children can understand the example I’m about to make… if your child wants something, but dad says no, and mom says yes… well, I won’t speculate on who’ll win that argument, but it’s easy to understand how a child will go to the parent they deem more likely to give them the answer they want in order to achieve their desired result.  This is also true for the landlord vs roommate vs property manager situation.  We can not do our job if a live-in landlord is undermining our efforts.

Evictions

In the unfortunate event that your tenant falls far enough behind on rent that an eviction becomes necessary, this is where the landlord/roommate situation can become really, really messy.  Unless you’ve been through one already, most landlords don’t realize how difficult an eviction can be.  As a judicial (courtroom) process, an eviction can take anywhere from weeks to months from the date of filing to the actual lockout (physical removal of the tenant).  To simplify explaining an eviction, it begins when the owner or property manager files paperwork (lawsuit) with a local court.  Within a few days, a summons must be (legally) served upon the tenant.  This should not be done by the landlord himself or herself.  The summons notifies the tenant of the lawsuit and the owner’s or property manager’s intentions to forcibly remove them from the property (in a landlord/roommate situation, this is when the doo-doo really hits the fan).  After receiving the summons, the tenant has a brief period of time to respond.  In most states, if the tenant fails to respond in a brief time-frame, a “default judgment” will be awarded within a few days to weeks.  If the tenant does respond to the summons, it usually goes to a bench trial (trial by Judge) within a few days to several weeks… depending on your local court system and how backed up or delayed the court may be.  So once you have your day in court, again, depending on your state or local laws, many courts give the tenants a brief period of time (usually around one to two weeks) to remain in the home before they send the Sheriff out to perform the “lockout” (the physical removal of the tenant).  So when you add the days up, if you’re the landlord and find yourself having to evict your own roommate, you’ll end up living in a very uncomfortable situation with them anywhere from weeks to months, depending on the court system, how savvy the tenant is, and/or if they hire an attorney to defend the eviction or drag things out.  So if you’re unfortunate enough to have this happen to you, know that you’ll be living with a very unhappy roommate for an extended period of time… all during the ongoing lawsuit.  If this doesn’t sound terrible enough, imagine an angry husband and wife living in the same house while going through their own divorce proceedings.  It can be a total nightmare…  and again, a situation where the property manager has little to no ability to control the “domestic” interactions between the landlord and the roommate.

Decide Carefully

If you do choose to rent out rooms in your house, do so very carefully and cautiously.  As I wrote earlier, renting out rooms has been a practice for hundreds of years… but laws have changed over time, and you can’t just get away with booting your roommate anymore.  Make your decision carefully.  Meet with your prospective roommate several times before deciding, just to insure you’ve been diligent in checking for compatibility.  Run a background check that includes eviction history.  Don’t get sucked into a “sob story” under any circumstances without doing your homework first.  And if you do choose to rent out rooms, know that you’re probably completely on your own, as there are few, if any property managers who will intercede in the event of problems.  An attorney may be your only available resource.

For more questions about renting out your home, or to discuss whether property management is right for you, we welcome your calls or emails.  Thank you for your consideration, and we look forward to helping your landlord experience be the best that it can possibly be.

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