I’ve had roommates ever since I can remember. If you count living with your parents as having roommates, then I’ve actually never even lived by myself. It’s ironic because I like doing a lot of things on my own and I’m definitely not the type that has to go somewhere with someone or do something with a friend. If I want to go see a movie and no one else wants to, I don’t mind going by myself.
But when it comes to my living situation, I’ve always had a roommate or even multiple roommates. I lived with my college buddies for a couple of years after I graduated until I bought my first property. One of the big reasons why I was so eager to buy a property at the tender age of 23 was so that I could rent out to my friends and have them pay a portion of my mortgage.
You Can’t Always Have Roommates
The nice thing about being young is that you’re free of all the responsibility that comes with having kids or even a family. Most of us don’t mind living with roommates before we’re married so that seems like the perfect time to buy a place. Once you’ve established a family, you’re not going to want to let one of your buddies crash in the spare room so that you can save $500 a month on your mortgage.
I would argue that there’s really only a small window where you can capitalize off your friends and their willingness to pay your mortgage. As you get older, your friends will start to get married and move in with their significant other and your landlord window will get smaller and smaller.
Easy Tenant Screening
One of the biggest headaches of renting out rooms in a property that you live in is tenant screening. Who are you going to let live with you and share your things? The best part about renting to your friends is that you should already have a very good idea of what they’re like. If you’ve lived with them before, you’ll know that they always have trouble coming up with rent or maybe they just flat out refuse to clean.
I ended up renting out my spare bedroom to one of my best friends and at the same time, my girlfriend (now fiancee) also moved in with me. I was actually making money every month and I got to live with two of my favorite people in the world. It turned out to be a nice second source of income and there was very little risk.
Some Things to Watch Out For
Anytime you go into business with friends or family you have to be careful. Money can do strange things to relationships and the landlord/tenant relationship is no different. Make sure that you get your friend to sign a lease clearly outlining the terms that you both agreed to. You probably won’t ever need to enforce the lease, but it shows your friend that you’re taking the relationship seriously. Don’t let things like late rent slide just because you’re renting to a friend.