One way to improve occupancy rates is to allow your tenants to have roommates. However, if you go this route, you’ll want to proceed with caution. The thing is, renting to roommates can come with a little more risk, which is why you want to take extra precautions.
When you’re talking over the lease with potential renters, make sure they understand what they’re committing to. One of the things your lease should include is information about joint and several liability.
Joint and several liability means that anyone who lives at the property is responsible for paying the rent and adhering to the lease agreement. Make sure your tenants understand that the total rent is due every month and if the lease is broken by anyone it’s considered broken by all.
As you discuss rules regarding the security deposit and rent, let your tenants know that you expect a single lump payment. Allowing your tenants to pay separately will only make things more complicated and could lead to headaches if one tenant doesn’t pay their part. Tenants need to understand that the security deposit and rent are expected in full from one source. How they divide it up is between them.
You can’t require tenants to sign an agreement amongst themselves, but you can suggest it. It’s a great way to protect yourself if problems arise later on. Renters insurance can be another great thing to recommend. You may be able to require it, depending on where your property is located.
When it comes to communicating with your renters, it’s best to have one point of contact. When signing the lease, ask your renters who can play that role. Remember to always screen each tenant that applies. And, if one tenant leaves and a new tenant comes on, you need to screen them as well (before they move into the space). Also, if you have a tenant replacement come in, then they need to sign the lease.
The benefit of renting to roommates is that you do have a larger audience to possibly target, making it easier to fill those occupancies. However, if you do allow roommates, just make sure to follow these tips and tread carefully.
If you’d like help creating a thorough lease, screening tenants, and managing your property, reach out to us. We’re happy to help with your investment.