Roommates add a special twist in that each one is typically contributing toward the rent.  This is good and bad.  You have multiple sources of income, but you also have competing priorities and motivations.  Roommates are frequently my most frustrating rental units.  Often this is what I experience (let’s assume the rent is $999 per month).

• Roommate 1 always pays her $333 rent on time.
• Roommate 2 has some issues paying on time, but always calls and usually pays everything by the 10th.
• Roommate 3 is always late on her rent and often short pays.  It is now the 15th of the month and after repeated calls you finally get $200.  She already owed you $150 from the month before for a total now of $350.

What do you do?

You can’t evict just roommate 3 as all of them are typically on the lease.  Do you want to spend the money to file an eviction?  Can you force the other 2 to make up the difference?

Here are some idea on how to handle this situation (preferrably before it happens):

• I got this idea from Ryan O’Neill over at Minneapolis Lofts.  He has all the roommatees sign the lease, but makes one of the roommates responsible for collecting the rent and cutting one check to him.  If they want to swap roommates or one is having issues, that one is responsible.  Love it!  This expectation needs to be set up in advance.
• When one roommate get’s behind, call a house meeting and sit them all down and explain that the other roommates need to pick up the slack.
• Send all the tenants a Cure or Quit notice.  Although it is not required, it may be enough to get their attention.
• Start an eviction or go to mediation.  This is a more drastic measure, but if the balance is high enough it may be worth it.
• Make sure that all the tenants receive a statement every month.  They should see that roommate 3 is not paying.

Managing this multi-dimensional situation can be challenging.  You just need to get out in front of the problem and stay there!

Let our experience get you started!

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I have come across many examples of landlords that require, in their lease, that the tenants carry an appliance service plan on the furnace, water heater, and kitchen and laundry appliances.  In Minnesota, this is called Centerpoint Energy Service Plus.  It costs about $8-15 per month, which is added to the tenant’s utility bill.

In the event that one of the covered appliances breaks, that “insurance policy” allows you to call Centerpoint and have a technician fix the broke unit.  Only if the appliance is completely unrepairable will you incur a cost.

Pros:

• The landlord shifts the cost of the plan to the tenants.
• You can virtually eliminate any appliance repair/replacement costs.
• The tenants can make the repair calls themselves without bothering you as the landlord.

Cons:

• Confirming the tenant has put the service plan onto their utility bill is difficult to police.
• Some states this may not be legal.
• Some tenants will simply refuse.

Other thoughts:

• As you increase the number of properties you own, it is NOT cost effective to pay this yourself.  With 28 rental units, I would be paying $300-400 per month in just service fees.  That would only be effective if I have something break every month.  Otherwise, I save the cash and just replace/repair units as needed.