For most Americans, cohabitating is not just a preference, but a necessity. According to Pew Research Data, 32% of the American adult population lived in a shared household in 2017, up almost 30% from the mid 90s. This increase can largely be explained by delayed marriage rates, student debt, rising housing costs, and more. With roommate living, both relative and non-relative, being a trend not expected to slow, it is critical that landlords understand how these situations work. Below, we will explore the lifecycle of managing multiple tenants from advertising, handling, and communicating in these relationships.
Watch out for Fair Housing Violations
First and foremost, discrimination against roommates is illegal and violates the Fair Housing Act at the federal level. “Roommates” can be families, friends, random pairings, engaged couples, or even people whose relationship you can’t define; all of these categories should and must be treated equally. The beginning stages of a property’s lifecycle include advertising your rental and receiving inquiries from potential tenants. As this happens, the Fair Housing Act must be at the forefront of a property manager’s or landlord’s mind.
To illustrate the importance of this, we sat down with our CEO of Hemlane, Dana Dunford. Dana shared a personal story from a time in her early 20s looking for housing in Redwood City. She, her partner, and another couple found the perfect house and attended the very first showing; they were the only ones there to meet the landlords, Sandra and Carl. Following the showing, they submitted their applications. They all had over 800 credit scores, 10x the income qualifications, no negative records (evictions, criminal history, etc.), and stellar references from their past landlord. Upon submission, Carl and Sandra said they wanted to host more showings and receive more applications before making a decision. Point blank, a clear Fair Housing violation. They were looking to rent to a family rather than roommates, when they should have accepted the very first qualified applicants they came across. Project Sentinel (Fair Housing in the Bay Area) even recommended that Dana bring this forward and initiate a lawsuit with fines. This mere suggestion by Project Sentinel reiterates the seriousness and importance of practicing equality in managing tenants. Dana never brought any lawsuit against them, but hopefully Sandra and Carl from Redwood City, CA read this article one day.
4 reasons why renting to roommates can be a good idea
Typically, landlords make the following arguments against roommates:
- There are too many of them on the property, causing more wear and tear.
- Drama and/or conflict is more likely, causing more turnover of roommates.
- It’s more difficult to communicate with many tenants, whereas families typically have only one point of contact.
But, overruling any of these statements is the federal law against discrimination. And counterarguing any of these statements are the many benefits of having multiple non-relative roommates!
- With roommates, it’s highly likely that every single tenant is working, which means the combined income tends to be higher. Additionally, risk is spread amongst multiple tenants compared with just one household earner for individuals or families. Finally, the wear and tear complaint is combated with the fact that tenants are more frequently off-site at work.
- Roommates are jointly responsible for the lease. Joint and Several Liability is a legal term that means all tenants on a single lease and each of the tenants on that lease can be held responsible for any and all monetary damages. If using a reputable lease, it should include this language.
- One tenant unexpectedly moving out is not the end of the world. Landlord’s might think this is a red flag, but the responsibility here falls on the other tenants to find a qualified tenant to take their spot. If the individual is no longer on the lease, the other roommates staying on become helpful resources to fill that void.
- Great service turns into longer lease duration and promising renters. In some situations, tenants may come and go, but it is possible to have a master tenant over time who cares for the property and stays long term, reducing your rental turnovers. Additionally, roommates may be at different points in their life; some may be ready to upgrade and buy their own home, but it is possible to have one that stays around for the long run, something every landlord dreams of.
Of course, renting to families also has its benefits, but seeing that roommate situations are typically more discriminated against, these points are worth discussing.
3 ways to set yourself up for success with roommates
In handling roommate situations, there are mistakes to avoid and certain ways one should approach the relationship. Below are 3 key steps to set yourself up for success.
- Set up one point of contact. Landlords have the ability to not accept partial rent, requiring only one check each month. (Read more about best practices for rent collection here.) They can also establish there to only be one point of contact, and everyone else on the lease is informed/updated but one person is responding on behalf of the lease.
- Ensure “joint responsibility” is understood by all tenants. It is not a landlord’s responsibility to get in the middle of renter interactions or conflicts. For example, when releasing the security deposit and sending the remaining balance, the landlord should not be involved in figuring out who owes for said damages or how to split the amount due. For maintenance request charges, it is also recommended that landlord’s simply send the full invoice and have the tenants discuss the responsibility for paying it.
- Avoid subletting. Every person over the age of 18 living underneath the roof should be explicitly named on the lease. This practice ensures you can vet every tenant (pull credit, background, etc.) and make sure each is qualified to your standards. Having a screening process and implementing a lease amendment for any tenant replacements is also important. You can find other important steps in the application and screening process here.
While renting to roommates can seem complicated, daunting, and risky, there are solid arguments for why it should be seriously considered by more landlords. Additionally, there are easy steps to ensure a seamless relationship with roommates from the application stage to many years down the road.
With risk comes reward!