Why I Require Written Notice
A 30-day written notice is required in almost all rental agreements for houses and apartments nationwide, so why would a room rental be any different? The notice is designed to protect landlords from having to struggle to fill a vacancy if a tenant leaves without giving notice. I can tell you from personal experience this has had a tremendous positive effect on my vacancy rates as well. It gives me the ability to fill the vacancy on the day it becomes available
A sudden vacancy does not only affect the landlord. It can also affects the rest of the household. When a room turns over unexpectedly, there may be showings, cleaning, move-in scheduling, and disruption for everyone. A clear notice requirement helps keep the home more predictable.
Why Notice Needs a Financial Consequence
Requiring a 30-day written notice will not have any impact if there isn’t a financial penalty attached to it.
Occasionally applicants do not have sufficient funds for the first month’s rent plus the security deposit. I prefer not to compete for applicants who cannot afford the move-in cost or who are not serious about staying for a reasonable period of time. Keep in mind that they cannot rent an apartment or a house almost anywhere without paying a security deposit.
How I Choose an Amount
When I started out, I only charged a $100 security deposit, but I discover that people had no problem giving up their $100 deposit if something better came along. After realizing my mistake, I decided to raise the deposit amount to 50% of the month’s rent. I could have made it 100%, but I was concerned that it would deter some good renters. Also, past experience taught me that if I filled the vacancy within two weeks of them moving out, I didn’t lose any revenue. You need to discover what works best for you and your particular marketplace.
What I Learned About Vacancy Rates
My current vacancy rate is incredibly low. Most of the time I have the room re-rented in less than two weeks and a large percentage of those are moving in the same day it becomes vacant. The longest I have ever had to wait to fill a vacancy was around 5 to 6 weeks. I don’t like to lose housemates, but I don’t lose any sleep over it either. You will discover, in most areas, that the housemate segment of the market will have a higher turnover rate than apartment or housing rentals. The good news is that, at least in my experience, you can re-rent them much quicker. I think the reason for that is there is a huge inventory of apartments to rent at any given time, but there is a very limited number of housemate situations currently available. It is also nice knowing that you are the most economical option available to rent a place to live.
Final Thought
Housemate rentals should be treated like any other rental situation, i.e. apartments and houses. 30-day notices and security deposits are the norm, not the exception. You will probably see some listings for roommates that don’t require either of these. Let them rent to the clients that don’t have sufficient funds or the ones that are not planning on sticking around very long to begin with. You will see over time that you will have a more responsible and better quality housemate by including notices and deposits in your contracts.
Disclaimer
I am sharing my personal experience as a live-in landlord, not giving legal advice. Rental laws, notice requirements, security deposit rules, and eviction procedures vary by state and city. Before creating your own rental agreement, check your local laws or consult a qualified attorney.
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