House Hack to Friends?

Question

Hey guys and girls,

I am looking to start house hacking soon and plan on renting some of my extra rooms out to friends. That being said, should I get them to sign a lease or not? It will probably be on a MTM basis so its not required by law here in Colorado but I was wondering what everyone on here has done. I don't see there being a problem with them paying rent, but if there is I would rather it be to me than to another landlord would can evict them.

If you do make your house hack renters sign a lease then whats some uncommon sections you will add in the lease? I would love to get some insight on this for the future if I start leasing to strangers as well.

Thanks,

Craig Curelop · Answer

@Walker Noon - Remember to treat your house hacking like a business. Even though they are your friends, I would not treat them any differently as regular tenants. Make them sign a lease, run the background/credit check, etc. The only thing I might do differently is give them a "friends" discount.

Steve K. · Answer

@Walker Noon I’m going against the grain here. When I was house hacking back in the day (long before the term “house hacking” existed, we just called it a flop house then), I rented to both friends and strangers at different times and had a MUCH better experience with my friends. 5 years with friends, never had a single issue: no late rent payments at all and no drama even with 8 of us and 4 dogs in a 4/3 sharing a tiny kitchen, usually with a few dirt bag climbers couch surfing or crashing in their vans outside too. When that phase unfortunately ended and all the friends hit the road for greener pastures, I started renting to randos. I screened as well as I could, they all looked good on paper, seemed nice in person, references and background checks checked out etc. but turnover was higher, living there was less fun, and a few house mates turned out to be nightmares: one started working as a paralegal and spent her days researching ways to screw me over on everything, another one started secretly growing peyote in his closet and ended up trying to stab another housemate who drank a bit too much one night and got emotional when I was out of town (they both spent some time in county jail over that incident and had to be asked nicely to GTFO) another one lived almost entirely off of expired frozen cod that he bought on sale for $1 and then microwaved it, making the house smell like nasty rotten fish for a few hours every night... barking dogs left unattended in the yard, dog fights, angry neighbors, dog poop, the peyote cult coming by and hosting drum circles into the night having bon fires in the yard, police coming by, fire department coming by... ...my future wife moved in and then we moved out pretty soon after, bought a different primary with no room mates, kicked all the crazies out and made it a normal rental rented to a family. I guess it depends on you and your friends. Are you easy to get along with but also able to set firm expectations? Are your friends reliable, responsible with their finances, easy going and fun to be around? A house hack is inevitably a blend of business and pleasure because you’re using your primary as a business. For me it worked out a lot better living with friends but I guess it will be different for everyone. Ideally you’d have a separate space that locks off from the main house and has its own kitchen and bath which gives you the most flexibility. If you’re sharing space, would you rather have it be with friends or with strangers? To me if I was doing it again now it would be with friends exclusively or at least friends of friends that I had some history on but that’s just based on my personal experience. If you have mostly lowlife friends with a history of causing trouble, moving often and not paying their rent, you might do better on the open market. If you can see yourself living together with friends happily then that will likely be better than taking a risk on the unknown. In Denver it’s easy to find people looking to rent but it’s also a transient place where people often move after 4-6 months when they find things don’t work out and move back where they came from, so with strangers you may end up with more of a revolving door than if you find friends who you know are planning to be there at least a year or two. Either way I recommend having leases for sure as that’s what you will need to fall back on if things do go south, which can happen with both friends and strangers, it’s the nature of the business. Good luck!

Jeff White · Answer

@Walker Noon I agree with Craig. Treat it like a business, and in Denver, you don't need to rent to friends, that's easy. Denver has so much demand for rent-by-the-room tenants that you can find plenty of people to fill those rooms. For your first house hack, it would be much better to rent to people that you don't know so you don't fall into the friend trap of trusting them since you know them. It will be a better landlord education for you, and also, not potentially ruin a friendship from living with your friends.

Nathan Gesner · Answer

Mixing business and friends is a really good way to lose your business and lose your friends. I'm not saying it's impossible, but I'm saying it's pretty difficult.Find a written roommate lease. Each tenant gets their private space which would include pretty standard things like giving notice before inspecting. However, you have to address the common areas that are shared by all. Who takes out the trash, sweeps the floor, and cleans the fridge? What do you do if a roommate leaves clothes in the washer? Is there a limit to when friends can visit, how often, how late, and how many?Search Google or BP for "roommate lease" or "roommate agreement" and I'm sure you'll find plenty.

John N. · Answer

Repeat after me NEVER RENT TO FRIENDS OR FAMILY. NEVER RENT TO FRIENDS OR FAMILY. And the last thing, never rent to friends or family.

Kyle Ashby · Answer

@Walker Noon House Hacking! The way to financial freedom! I think that is a wonderful idea. I would definitely sign a contract. This will not only protect you and you friend fincacially/legally but also provide some accountability to maintain your friendship

Allan Smith · Answer

I house hacked for 5 years, rented to friends and it went great. They don't want to live in a house with you and owe you money. There's something about being down the hall that makes people make rent a priority. Plus they probably paid a smidge under market rent for the buddy discount, which seals the deal for ensuring recurring rent payments.yes sign lease. I did. Sets expectations which sometimes is everything. Plus, banks will like the income on a lease.

John N. · Answer

@Walker Noon LOL, no doubt I have some questionable friends and family but that's not the reason. Inevitably it will end up costing you money or a friendship. Maybe not the first time or the second time but somewhere along the way my advice will be ignored and Someone is going to rent to their friends kid or Aunt Judy's step-son and when you refuse to cut them a break because XXXX and charge poor Cousin Leonard a late fee your name will be Mud at the next family reunion. Unless you give the break that one time, then it happens again and again and the Leonard misses a boat payment and has to play catch-up at the credit union The credit union is going to get paid before you do because you ain't no kinda man if your bass boat get repossessed and you have lost money and Aunty Judy just laughs at you because your people "never were any good with their money"

Daniel Haberkost · Answer

@Walker NoonI had a very good experience renting to my friends down here in The Springs. The key was that I was VERY upfront with them that this is my business and they would be treated like any other tenant. Also, who are the friends you’re renting to? Do they have solid incomes and are they responsible? The ones I rented to were which is a big part of why I was okay with it. The point is, if you’re going to rent to friends you need to set the same standards and expectations you would for anyone else!-Dan

Mark F. · Answer

@Steve K. I agree. I've done this for years. House hacked with friends. Can it be a pain? Yes sometimes. But it's worth it. OP, SIGN A LEASE! Do not be that person without a lease. All of my friends had zero issues with doing it and it covered my butt. My good friend stopped paying due to lack of job. I reminded him about our lease and he payed me back as soon as possible. We're still friends to this day. Sign. A. Lease.