Becoming an at-home landlord to get ahead

My second extra-income suggestion for getting away from living paycheck to paycheck was to rent out a room in your house or apartment.  I know, many of you just don’t like the sound of this one or think that renting out a room in your house means inviting a stranger to live with your children.  Or, many people quickly go from “that might not be a bad idea” to “but I don’t want to live with a stranger.” 

But neither of those needs to be the case.  It is possible to earn some pretty significant cash flow relief by renting out other rooms.  (CAVEAT: if you’re a renter make sure to check your lease/landlord to make sure you are allowed to do it – you don’t want to get kicked out for violating the terms of your tenancy).

So let’s talk about a few folks you may be more comfortable living with: 

• Relatives (really any relative - siblings, cousins, parents, aunts, uncles, etc.);
• Friends;
• Co-workers (who you like…); and
• And, “friends of” relatives, friends or co-workers.

I know – none of these is perfect.  But living paycheck to paycheck isn’t perfect either, is it?  And each of these has advantages or disadvantages. 

• You may be closer with a relative, have a longer-term relationship or prior experience living together.  But your social life might take a hit if you’re living with Uncle Eddy;
• You may have a closer/more casual relationship with a friend, but may not have the same personal habits or long-term comfort level with them as you have with some relatives;
• You may have similar schedules with co-workers, but you may not have any comfort level with them (yet); and
• You don’t even know “friends of” yet, but they do come recommended by someone you trust.

So how do you break the ice?  How do you approach a relative, friend or co-worker? 

Here are a few steps to consider for implementing the plan: 

• Know that many (most?) people have some financial stresses and look to save money.  It’s OK.  The worst thing they can say is “no thanks.” 
• Find someone who is a renter.  I’m sure you have one relative, friend or co-worker who is a renter and who you may be comfortable living with. 
• Tell them what you’re doing.  (“Hey, Jill, I’ve been pretty much living paycheck to paycheck for a while and would really like to get ahead of my finances.  I was thinking of different ways to make more money and cut some of my costs.  I was thinking that I could rent out the extra bedroom I’m using as an office, but I don’t want to live with a stranger.  Any chance you, or someone you know and trust, would consider bunking up with me?  It could be a way for both of us to save some money.” 
• Ask them what they pay for rent. 
• Offer to do it for two months as a trial period to see if it makes sense for both of you. 

Other keys to renting/living with family/friends/co-workers:

• Try and pick someone you believe (or someone you trust believes) is a responsible person (financially and socially);
• Go into it completely honest about each of your concerns.  Tell him/her what you’re afraid of.  Tell him/her what your quirks are and what irks you.  Ask what bothers them and what “odd” things they do;
• Be open about the finances of the situation.  Tell them what your costs are, what you would like financially from the situation (i.e. 1/2 the rent/mortgage plus 1/2 utilities.  Show them the utility bills for the last three months so there are no surprises.  And let them know about your cable package and Internet.  (You might be surprised at the fight that could ensue when one roommate wants HBO and another doesn’t.  I’ve witnessed a few.  So show the cable bill and make sure each of your expectations is known before you move in.); and
• You also need to be careful not to destroy a relationship by getting “too close.”  If you see that happening, talk with your new roommate.  They may be thinking the same thing, but just not comfortable bringing it up.  Cut off the living situation before you torpedo the relationship! 

Overwhelmed?  Stressed?  Don’t be.  This is about getting intense. Who knows, maybe your new roommate can become your budget buddy too!

But only take the plunge when you’re completely comfortable with your new roommate and the idea of being (and having) a roommate.  Talk with people you know well and trust.  Get their advice!