If you have a spare room at home that’s become a dumping ground of sorts, why not rent it out? Having a tenant is a great way to earn some extra cash that you don’t need to work for, although if you’re not careful, can cause unnecessary trouble especially if you let out the room to a complete stranger.
Since you’re going to be stuck sharing your living space with them, you need to screen any potential tenants carefully. Here are 6 essential questions to ask when looking for tenants:
1. How will utility bills be split?
Other than how much to charge for rent, you’ll have to think about whether you wish to include the cost of utilities in the rent. In the past, many landlords used to just jack up the price of the rent, and then offer free utilities. But considering how badly the rental market is doing now, it’s going to be harder to do that.
Should you decide that utilities bills are to be shared between you, you need to decide exactly how this should be done. Should they be split equally? Or do you just want to collect a lump sum from the tenant every month?
You also want to be prepared for the possibility that the tenant will be using more than his fair share of utilities. If you are hardly at home, while the tenant leaves the air con on 24/7, splitting the bill equally will be disadvantageous to you.
2. Should tenants should be allowed to have guests over?
Many Singaporeans who rented out rooms in their HDB flats used to impose strict rules on their tenants. I have a friend who was not even allowed to use the kitchen in the flat where he was renting a room, nor was he allowed to have people over or consume alcohol anywhere but in his room. I’m surprised they didn’t require him to change into a prisoner’s garb upon entering the flat.
But given the state of the rental market these days, imposing such rules on your tenants will ensure that the only one person who’ll take you up on the offer will do so only because you desperately lowered your rent to $500 a month.
If you’re willing to allow your tenants to have friends over, do set some ground rules so things don’t get out of hand. For instance, you might allow them to have people over only up to a certain time in the night. You might also ban guests from staying over, just in case your tenant decides to become a couch-surfing host, or find a new girlfriend or boyfriend. And what about situations like the tenant’s entire family visiting from overseas?
3. Who does the chores?
Many roommates’ lives have been lost in fights over cleaning. You might have been happy to clean your flat when you and your family were the only ones living there, but chances are you don’t want to have to stick that toilet brush into the bowl when someone else has been using it.
Think about your cleaning options before agreeing to rent out the place to someone. The cheapest scenario would be one where everyone splits the cleaning chores equally, but in my experience this doesn’t always work that well in shared accommodation. Everybody always tries to get away with doing the bare minimum, and there are times when nobody wants to own up to a mess that has mysteriously appeared in the kitchen or bathroom.
Another option is to split the cost of having a cleaner come in once a week or twice a month. If you have multiple tenants in the house, the cost per person will be lower.
4. What is your noise and behaviour threshold?
Shared apartments tend to be nothing like a scene from Friends. Many people don’t even bother making polite conversation with their housemates, preferring instead to hide in their rooms.
That means you won’t be seeing, so much as hearing, your tenant. If you are the sort who is very sensitive to noise, you might want to set some ground rules, such as banning loud music or use of the TV in the living room after midnight.
You might also want to pre-empt certain behaviours that you cannot stand. If yours is a non-smoking household, you’ll want to make sure your tenant does not smoke inside the flat. Many landlords set up a small table and chair on condo balconies so their tenants can smoke without affecting the rest of the house.
5. What is your potential tenant’s schedule and lifestyle like?
Instead of fixating on the colour of a potential tenant’s skin, you should be more concerned about what their schedule and lifestyle are like. Since you’ll be living with them, you want to avoid renting to people whose lifestyles are disruptive to yours.
For instance, if you’re a working professional and are at work or commuting from 8am to 8pm every day, you might have issues renting out your place to a student who’s up and about until 4am when you’re trying to rest your overworked body.
On the other hand, some people who work from home prefer to share their homes with others who do the same. I have a friend whose landlord set up a small co-working space in the house they were renting out as several of the people living there were freelancers. It also justified higher rents, which many of the tenants were willing to pay since they got a home office.
And if you’re older or just want some peace and quiet, you might think twice before renting your place out to students or twenty-somethings who are constantly partying. You’re better off looking for slightly older professionals working in demanding jobs that require them to be at the office for most of the day.
Text: Joanne Poh / Additional Reporting: Elizabeth Liew
This story first appeared on the MoneySmart blog.
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