Renting to Your Mates
According to data provided by the Australian Bureau of Statistics (ABS), our greatest demographic of renters are those under the age of 35 who do not have any children living with them. Those glorious years of independence! Regardless of whether you include yourself among this group or not, the following is a rundown of the pros and cons of sharing a living space and advice on how to divide up the costs of the rent and the bills.
Having a roommate or two can alleviate some of the financial pressures that come with renting. It is possible that if you split the rent with roommates, you will be able to afford a nicer location. The fact that co-tenants are jointly responsible for rent is important to keep in mind. This implies that you are committed to the agreement both as an individual and as a group. It also means that if one person does not pay their share of rent for a few weeks, other tenants may be held accountable.
Benefits of renting with roommates
In the event that the landlord is pleased with your application, you and your prospective roommates will be required to sign a co-tenancy agreement prior to moving into the home in question.
This would ensure that each roommate has equal legal rights and obligations, with no co-tenant authorised to influence others’ power. This works really well if you share housing with a variety of individuals that you are familiar with and feel comfortable trusting.
Having a roommate or two can alleviate some of the financial pressures that come with renting since it reduces the amount of responsibility that falls solely on your shoulders to cover all of your living expenditures. It is possible that if you split the rent with roommates, you will be able to afford a nicer location than you would be able to afford on your own, and you will also be able to save money on the amount that you pay for shared household goods and utilities.
When you live in a house with roommates, you get to spend a lot of time with their friends and family members as they come and go in their life. This is one of the enjoyable aspects of this type of living arrangement. In addition, you will nearly always find someone nearby who is willing to enjoy a drink with you, carpool with you, order takeout food with you, or even be your hero by letting you in after you’ve locked yourself out!
Negatives of renting with roommates
Given the appropriate (or incorrect) set of circumstances, the positives that come with a co-tenancy agreement have the potential to turn into the arrangement’s drawbacks. The fact that co-tenants are jointly responsible for rent is the most crucial aspect you have to keep in mind. This implies that as soon as your pen strikes the paper, you are committed to the agreement both as an individual and as a group. This is the case regardless of whether or not the agreement was written down.
For instance, if one of your co-renters did not pay their share of the rent for a few weeks and the amount that they owed continued to accumulate, all of the other tenants, including you, may be held accountable.
In order to help make sure that your experience of renting with roommates goes off without a hitch, here are a few payment-related pointers to take into consideration:
Paying the landlord
Make sure you keep track of your weekly payments, so you don’t end up having to cover your roommate’s rent. It will be awkward if you find yourself in this circumstance. If you keep an eye on the payments, you might be able to prevent this situation. If you ask for a receipt of your payment, the landlord or property manager of the rental unit you are renting will give it to you. This request can be made whenever it is convenient for you.
Keeping on top of this will allow you to check that the necessary payment is being made, and if it isn’t, it will give you the chance to take immediate action to fix the situation, should it turn out that the payment is not being made.
Splitting the rent
When you are living with roommates, one of the most difficult tasks you will face will be determining how to divide the rent. However, this step needs to be completed before you sign the lease. Here are two potential options that can assist make this process as fair as it possibly can be and help lessen the likelihood of any disagreements arising.
Divide the square meterage
This is a straightforward and equitable approach of dividing the rent. To get an exact breakdown, take the square footage of each bedroom, add them together, and then divide the sum by the home’s overall square footage.
This provides you with the proportion of the total space that is occupied by each room. After that, calculate each individual percentage’s contribution to the overall amount owed as rent. Consequently, the cost is broken down according to the percentage of the total space that is occupied.
Who has the most perks?
Think about what each individual gets for the rent and ask yourself if it’s equitable. For instance, someone ought to pay a supplemental fee if they have an en suite bathroom, built-in closets, balconies, and windows. You are able to put a price on each of the amenities and then add that total to the overall price of the accommodation.
Paying the bills
When living in a house with roommates, one of the most contentious issues that might arise is determining how to divide up the expenses for the household’s various utilities. As soon as you move into the property, it is advised that you delegate the task to one of the other tenants. This does not mean that they are liable for paying the full cost; nevertheless, they are accountable for making timely payments on the debt.
In general, you should split the expenditures such as gas, electricity, internet, and water evenly among all of you, and then pay the member to whom you have been assigned the requisite amount whenever it is necessary.
When there is a disparity in consumption, things may become challenging. For instance, one roommate may have an electric blanket that they never turn off, while another may be the type of roommate that consistently streams reruns of Star Wars every single day. If this is the case, it may be worthwhile to negotiate a deal with them to guarantee that they pay more fees for their routines.
I wish you the best of luck with your roommate experience and assure you that you will certainly have a great time if you plan it out properly and take care of the rent and expenses straight away.
Renting with friends: 5 ground rules to follow
If you want to give yourself the best chance of being successful while moving in with friends, here are five things that you need to agree on before signing a lease.
If you and some friends are thinking about moving into a rented apartment together, you should follow a few ground rules to ensure that you will still be close friends after the lease is up.
Set up a roommate agreement
Fans of the television show The Big Bang Theory should know that a roommate agreement does not have to be as onerous as the one that the fictional Sheldon Cooper imposed on his unfortunate roommate Leonard Hofstadter. A contract that has a large number of provisions and subsections that are difficult to understand is likely excessive. However, before you start looking for a property to rent together, it is a good idea to agree on a few ground rules to save your friendship from going through a major disruption.
Each roommate would be expected to sign the lease agreement in a typical situation. When all roommates contribute equally to the cost of the lease and the ongoing rent, this is referred to as an all-in approach. You will also need to understand the monthly rent payment and how much it would be.
One of the more common approaches includes each roommate paying their own portion of the rent directly to the rental property manager. Taking this strategy also makes it simpler to identify those who are late with their payments or who don’t pay at all. Having said that, your property management would most likely pursue all of your roommates to ensure that any rent arrears are addressed, regardless of the name of the roommate who is falling behind. Also, because each roommate is responsible for their own payment, no one roommate is accountable for pursuing up the rent or being financially disadvantaged if another roommate runs away.
- Plan how you’ll share your rent and costs
TheIn the roommate agreement, you and your roommate(s) should discuss the payment schedule for the rent. For example, one of your roommates may get paid once every week, while the other gets paid every two weeks or once every month. In a same vein, it is highly recommended to work up a plan for paying for essential services such as gas, electricity, telephone, and internet.
It may appear that an even share between co-tenants is the most logical answer; nevertheless, if one roommate travels frequently for business, it is possible that modifications may need to be made to the bills for power and the internet. In a similar vein, if another roommate works from home for major chunks of the week, it seems only reasonable that they shoulder a larger proportion of the cost of the utilities.
- Agree to a cleaning schedule
The lease agreement between the landlord and tenant states that the obligation for maintaining the rented property is with the renters. Disputes about the level of cleanliness in rented homes are one of the fastest ways to drive a wedge between roommates. Make sure you and your roommates have a housekeeping routine before moving in together. With this timetable, everyone of the flatmates will be responsible for their portion of the cleaning and tidying and the cooking.
4. Set rules about overnight guests
It is essential to have rules about visitors and partners staying over. The condescending Dr. Cooper from “The Big Bang Theory” provided a humorous solution to this problem in the famed “overnight guests notification clause.” The Cooper and Hofstadter roommate agreement has a provision that states, “if a non-related female is staying overnight, there must be a 24-hour notice period issued,” which mandates that a notice must be provided.
Once people start staying longer or becoming more involved, there needs to be an agreement regarding how much they will contribute to the rent and other costs. In addition, you are required to let your property management know about any changes to your lease that occur when a new partner moves in permanently with you.
- Make a plan for what will happen if someone wishes to leave.
Additionally, it is good to add regulations regarding how a roommate might quit the tenancy early, particularly if their name is on the lease. The early termination of a roommate’s lease is a common contributor to the dissolution of a friendship. Prior to a co-tenant moving out of the property, there has to be a discussion and an agreement on the amount of time that they will continue to pay rent until a new tenant comes in.
6 Reasons You Should Rule out Renting to Friends
Many first-time landlords are under the impression that renting to someone they already know is a simple way to get high-quality tenants and maintain a steady rental income. Because you already know them, there is no need to pay for a background check to be done. You won’t have to worry about the costs associated with marketing your home. They will promptly pay the rent and take care of your property. You may put your faith in them. The ideal renters to have.
Sadly, this is something that only seldom turns out to be the case. Many landlords have been quoted as saying that they will only rent to friends and family. I’ve heard roughly the same number of people remark, “I really regret renting to my friends.” The following are some of the most compelling arguments against renting to friends:
- Friends Can Take Advantage of You
When you act as a landlord for friends, it is not uncommon for them to take advantage of you, despite the fact that they may not want to do so. For example, it’s possible that they pay their rent a little bit more slowly than usual or that they demand every minor problem with the property to be resolved right away.
There is a good likelihood that you won’t have checked up on them beforehand. Therefore, you won’t have to perform the background checks that are intended to identify possible problem tenants before you sign them up as renters.
In addition, the fact that your buddy is renting from you makes it less likely that you will give the lease agreement the importance it deserves. You’ll be engaging in a lot of trusting behaviour and shaking hands. If only everything were that straightforward. Keep in mind that you have nothing to back up your claims if it is not in paper.
- Friends may not alert you to the need for repairs
Some of your friends will take advantage of your generosity and kindness, but others may not feel comfortable approaching you with complaints or reporting repairs because of who you are. Because of the tight personal relationship between the two of you, it is possible that they are aware that you are unable to perform a repair or do maintenance work at this time due to financial constraints.
They either do not inform you in order to spare you the embarrassment, or they attempt to make a temporary fix to the problem themselves. Either the problem is not corrected, which leads to it getting worse – and more expensive – or the repair is done poorly, which leads to it costing more to fix. Renting to friends will, in any case, result in financial loss for you.
- Your Friendship Will Become Strained
Whoever claimed that you shouldn’t combine business and pleasure, I can’t place their words in my head. Regardless of who said that they were correct. When you rent to friends, the power dynamic in your relationship shifts to one in which you are in the dominant position.
If they are behind on their rent payments, there is a good chance that they won’t come out with you for the evening. You might wonder how they can afford to eat out, have a glass or two of wine, and a few alcoholic beverages on a regular basis while they are behind on their rent payments.
On the other side, given that you are the landlord, you could believe that it is your responsibility to pay for their beverages to express gratitude for being such a responsible renter. You’ll wind up spending more money, all while your buddies, who are also your renters, enjoy yet another inexpensive night on the house thanks to you.
When you know that your roommate has been going through a rough patch for the past month, it will be difficult for you to ask for rent payment late. So you’re going to shoulder the burden of financial responsibility for them, which will put a strain on your friendship. You won’t have any money, and you’ll be able to keep your mouth shut. Until you can’t remain quiet any longer. The feelings that have been building up for some time will eventually come to a head, and once that happens, that once-tremendous friendship will never be the same again.
- You Will Probably Ignore Damages
You should still collect a security deposit even if you are renting to friends. More fool you if you don’t.
When it comes time for a tenant to vacate a rental unit, the security deposit is there to cover any unpaid rent or property damage that may have occurred. However, when the money for the security deposit comes from a friend, this task is incredibly tough.
At the end of a lease, there is typically some back-and-forth over the paid security deposit. The renter will provide their side of the argument, and you will present yours. You will negotiate a mutually agreeable sum that will pay the damages. In that case, it may be decided by an arbitrator. It is possible for the talks and the procedure to become muddled when a friend’s security deposit is at stake. There is a possibility that other friends may be drawn into the disagreement and asked to choose a side. Before you realise it, a significant number of your friends will stop speaking to you because they will believe that you are not a friend but rather a “selfish, money-grubbing landlord.”
- It’s Almost Impossible to Evict a Friend
Your acquaintance has apparently fallen behind on a couple of rent payments. They have guaranteed that they will pay you. They’ve hosted rowdy parties that go on well into the night. They have given their word that they will be more tranquil. They have not been maintaining the condition of your property. They have guaranteed that in the future, they would perform more admirably. You would have begun the eviction process a long time ago if this person were only a renter and not your friend, but you chose not to do so. It’s not that simple to do with your pals. How can you force a buddy to live on the street without being labelled as the person who is behind it by your other friends?
- Renting to friends won’t help you maximise your rental income
Let’s be honest: when you rent to friends, you’re going to give them a better rate than you would give to strangers. You will provide the prices of your friends.
If the tenant were a buddy of yours, it’s likely that you won’t raise the rent as much as you would if they were a stranger.
Renting to Friends Is a Mistake
It is a poor decision to rent to friends. Don’t do it. You won’t have any money left over, and your friendship with them will change permanently as a result. It’s possible that a friend will take advantage of your generosity, even if they don’t want to. It is possible that damage and repairs may not be documented, which will result in increased expenses in the long term.
If you want to maximise the return on investment from your buy-to-let home, my recommendation is never to rent it to a friend or family member. However, if any of your friends are currently without a place to stay, consider opening up your house to them for a few nights.
It’s possible that a friend will take advantage of your generosity, even if they don’t want to. In addition, the damage and repairs may not be documented, which will result in increased expenses in the long term.