Renting to a Roommate

[Maksim Easley]

Hello BP. I am a 21 year old college student and I recently bought a 2 bed 1 bath condo to house hack. I have a friend that is most likely going to rent the spare bedroom on a month to month basis. I have never rented anything out before so my question is, how should I go about it? Should I get a contract and if so, would one on BP work or should I have an attorney create one for legal purposes and talk to an accountant on how to get the most out of it for tax benefits? I assume I should have him pay me by check or money order, is that correct? Any and all advice/information is appreciated. Thank you in advance.

[Kenny Dahill]

@Maksim Easley, great problem to have!  Kudos on getting your first deal so young too.  I was 23 when I bought my first house and had my former roommates move in with me.  Here are some lessons:

• Friendship:  Be aware that finances and friendship doesn't always mix.  There's always this risk but honestly you can control that risk with these steps
• Contract:  I had a lease with my roommates, mostly to make sure they didn't just get up and leave.  You never know when they might get a girlfriend and move-in suddenly.  I was always relaxed about the move-out date but the contract gave me control to determine if it was alright to move out early or not.
• Landlord vs. Roommate:  You are to be treated as two people: the landlord and a roommate.  That means common chores are split, utilities are split and maintenance is split.  However, when the HVAC goes out or repairs not caused by tenants occur then you are the landlord and must foot the bill.
• Conversation:  It's important to sit down with everybody and go over the contract, responsibilities and the finances.  Don't wait until your roommate put grease down the drain to have the conversation he is responsible for that plumber bill.  Trust me, grease clogs...

I only had one issue with a friend being a roommate, and he was more an acquaint.  He had a lot of growing up to do and I knew that but tried to help him a jam.  My other roommates that were actual good friends, never an issue.