Renting a Room questions

[Daniel Ricci]

Hi all!  I'm in the process of purchasing a condo in Davie near the school I'll be going to (Nova Southeastern University).  Its a 3BR/2.5BA townhouse.  I'm looking for a roommate to help cover costs.  I have a lead of another student who is interested in renting a room who is in the same program as I am (medicine).  After looking over some other posts, I have utilities factored into the rent and I plan on doing month-to-month just in case.  I've consulted with the lawyer who is handling the title and he will give me a lease that I can use and go over it with me.  I do have some additional questions that maybe you guys can answer:

1.  Do you think it is necessary or wise to open a business banking account?  I figure that should keep all the finances separate just in case.  All the rent he pays would go to the business account.

2. Should he carry rental insurance for his room and stuff?  (My lawyer advised I call my insurance company, but I'd like to know other peoples experiences as well).

Any other tips, advice, words of wisdom will be helpful.  This is my first time being a landlord and I'm from out of town.  I want to make sure I don't do something stupid or, worse, illegal.

thanks,

Danny

[Jon Q.]

Originally posted by @Daniel Ricci:

Hi all!  I'm in the process of purchasing a condo in Davie near the school I'll be going to (Nova Southeastern University).  Its a 3BR/2.5BA townhouse.  I'm looking for a roommate to help cover costs.  I have a lead of another student who is interested in renting a room who is in the same program as I am (medicine).  After looking over some other posts, I have utilities factored into the rent and I plan on doing month-to-month just in case.  I've consulted with the lawyer who is handling the title and he will give me a lease that I can use and go over it with me.  I do have some additional questions that maybe you guys can answer:

1.  Do you think it is necessary or wise to open a business banking account?  I figure that should keep all the finances separate just in case.  All the rent he pays would go to the business account.

2. Should he carry rental insurance for his room and stuff?  (My lawyer advised I call my insurance company, but I'd like to know other peoples experiences as well).

Any other tips, advice, words of wisdom will be helpful.  This is my first time being a landlord and I'm from out of town.  I want to make sure I don't do something stupid or, worse, illegal.

thanks,

Danny

Before getting started, I suggest contacting a realtor in your area that does leasing or looking up on Craigslist for your area to see what are typical lease terms...In order to get the largest possible applicant pool, you generally want to use terms that are common in your area (ex. term, security deposit, pet deposit if any, etc.).

(1) No, no need for a business account.  You can just open a second checking account and keep your rental related income and expenses in that account.

(2) Personally I wouldn't force him/her to get rental insurance, but there are a lot of investors who do force their tenants to get rental insurance.  If it's a well qualified person, with high credit and income, generally they will be responsible so I wouldn't force them.  But I would very thoroughly screen them (credit, income, criminal checks), interview them, and try to drop by to their current residence to see if it is clean, tidy, well taken care of etc. 

There are rentals for everyone, but make sure you select "the right" person for this type of rental. Example: a single student with no family isn't a good tenant for a 4 bedroom house in suburbia.  A family of 4 isn't a good fit for a studio condo. 

Tips: I've managed properties across three states for over 15 years.  Picking "the right" tenant is the single most important decision you will make as a manager of property.  Make sure you thoroughly screen them and spend enough time interviewing them to get a full understanding of who they are.  Also, avoid anyone who is overly demanding.  They will be a constant pain.  Finally, after you've reviewed all information, consult your intuition.  NEVER accept an applicant or do a deal that does not FEEL RIGHT. 

Best of luck to you.

-jon.