Life with roommates isn’t easy, but sometimes it’s necessary to rent out your spare room(s) to pay the bills. Whether or not you have previous experience as a landlord, these 6 tips will make it easier to live with a tenant:
1. Create a written lease or rental agreement
Verbal agreements are valid, but they aren’t reliable. If you end up in a legal battle with your tenant, you’ll wish you had put your agreement in writing.
A written agreement takes away any possibility of either party remembering the agreement incorrectly or arguing for agreements that were never made. A tenant might fight against something they agreed to, but with a written agreement their argument won’t fly in court. For example, if you evict your tenant for breeding hamsters, and they signed a lease that doesn’t allow pets of any kind, they might argue that the hamsters aren’t hurting anyone. In court, however, the judge will recognize the hamsters as a violation of your pet policy. Without a written agreement, it’s your word against theirs.
2. Don’t make exceptions to your agreement for late fees
It’s natural to want to be the nice landlord and forgive late rent, especially when you know the person legitimately didn’t get their paycheck on time. The downside is, when you let a tenant slide with their agreements, they will expect forgiveness in the future. The moment you don’t forgive a breach of contract, they will feel sideswiped and become irate.
3. Enforce late fees from the beginning
Don’t enforce your rental agreement arbitrarily. Enforce every policy to the letter from the beginning. Don’t allow a tenant to be late with rent for six months and then decide to enforce the late fee policy because you could use the money. To your tenant, that will occur as betrayal, even though it’s really not. The last thing you want in your home is an upset tenant.
Renting a room to someone makes the landlord-tenant relationship feel more casual than it should be. It doesn’t matter if you’re renting to a friend, a family member, or a stranger – don’t make exceptions to your late fee agreement. At least not for a while. Tenants can come up with all kinds of excuses for late rent. Set the tone that you’re serious about your agreement. If you choose to be forgiving in the future, your tenant will appreciate your leniency rather than feel entitled to it.
4. Be understanding, but put your foot down
It might sound harsh, but don’t let your tenant skip out on late fees because they’re living paycheck to paycheck. It’s not about collecting the money. It’s about holding them responsible for their agreement, so they don’t take advantage of you in the future. If your tenant has to skip some pizzas to afford rent when it’s due between paychecks, they will. If you keep letting them wiggle out of late fees, they won’t have any incentive to change their routine.
Even if your renter has to make payments of $15 each week for two months, don’t let them off the hook for those late fees.
6. Make sure your new tenant is an authorized occupant
If you own your home and you’re bound by a Homeowner’s Association agreement, your right to rent your spare room might be limited. For instance, many HOAs have rules against renting to short-term renters through sites like Airbnb. Your HOA won’t necessarily care where a short-term renter comes from. Check your HOA agreement to make sure your new roommate is authorized.
Local ordinances might restrict your right to rent
In addition to HOA restrictions, some cities have short-term rental restrictions that apply to everyone. For example, in New York City, it’s illegal to rent a room to anyone for less than 30 days unless that guest has access to all parts of the dwelling. In New Orleans, a local ordinance prohibits renting a home for less than 60 days in the French Quarter, and for less than 30 days everywhere else. In Houston, if you take on short-term renters, you might need a special permit, and be subject to a hotel occupancy tax.
When the Super Bowl was held in Houston, many people in Bellaire chose to rent out their homes – some went for $10,000 per night. For those who played by the rules, they had to get an inspection and a certificate of occupancy.
Occupancy limits matter
Occupancy limits also play a role in determining whether your new tenant is an authorized occupant. The Texas Property Code imposes a limit of three adults per bedroom and no limit on children under the age of 18. If your home has one bedroom, and there are already three adults living there, you wouldn’t be able to rent to another adult.
You don’t need to worry about Texas cities banning short-term rentals like others have done. Senate Bill 451, designed to prevent the banning of short-term rentals, was passed in 2017. It was added to the Texas Local Government Code and restricts the ability of cities like Houston and Katy to write ordinances banning short-term rentals. Short-term rentals can be regulated, but they cannot be banned.
If you’re not sure your renter will be legal, check with your attorney or property management company for clarity on the matter.
6. Keep your cool at all times
Living with someone in close quarters can try your patience. While it’s never a good idea to get involved in arguments with roommates, when you’re the landlord, you have a duty to remain cool and collected.
Don’t give your tenant any reason to harbor anger or resent toward you. If they’re doing something that bothers you, approach the situation as you would any other member of your household. Aim for resolution that works for everyone rather than demanding they conform to your way of doing things. Treat them as a roommate, not just a tenant.
Hopefully, you’ll only need to share your home short-term. If you’ve got other investment properties in the Houston area, it shouldn’t take you long to achieve your financial goals and get your home back to yourself.
Green Residential can help
If you need help managing your Houston investment properties, consider Green Residential for all your property management needs. With more than 30 years of experience, we’ve worked with all kinds of landlords and tenants. We can help you achieve the peace of mind you were looking for when you bought your investment property. Contact us today to find out what we can do for you.