Renting rooms is the number one way for the average person to get ahead financially. It requires very little investment, and the returns are infinite.
However, renting a room to a stranger can be intimidating. There are many unanswered questions until you physically live with someone.
What if you knew your prospective roommate? What if you considered them a friend? Could you live together and keep your friendship? That’s what we will discuss today.
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The benefits of renting rooms. I want to take a quick detour to explain the benefits of renting rooms. Renting rooms gives you immediate cash flow toward your expenses, savings, and investments.
You create multiple passive income streams when you convert rental cash into interest payments and dividends.
The math of renting rooms looks like magic, and I can vouch for its ability to create wealth. The book “The House Hacking Strategy” delves deeper into the number of room rentals.
Can you rent a room to a friend? Let’s be honest; most of your friendships won’t last a lifetime. You may get two to five lifetime friends.
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So not renting rooms to preserve a friendship is a moot point. If your friendship can’t survive shared living, it probably wasn’t going to last anyway.
Respect is key. The most important part of maintaining a friendship is mutual respect as friends and as landlord and tenant.
If you let your friend run all over you inside the home, you will become miserable. Conversely, the relationship can go sideways if you try to control your friend (i.e., making them clean their room or do chores).
Here is a quick checklist of how to successfully live with friends while you all become rich.
- Find the right friends
- Set the ground rules
- Write a simple contract
- Eliminate 90% of emotions
- Create a two-way forum
- Reward good behavior
Find the right friends. If your friend is a slob, can’t keep a job, or is irresponsible, don’t take them on as a roommate. Chances are that they will be eager to live with you because you can provide them stability.
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Your organized, motivated, and hard-working friends will have reservations about moving in with you. They value their freedom above all else.
However, if you can sell them on the math, you can convince them to make a move. Plus, it can be a short-term plan anyways. If it doesn’t work out in a couple of months, you can split—no hard feelings.
Set the ground rules. The ground rules are the day-to-day activities inside the home. You want to discuss this before they move.
If you have never rented a room, you won’t know the rules until you obtain a roommate. I’ll have to write an article about some ground rules to help people determine their own strategies.
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Some ground rules can include how many kitchen shelves they rate, who takes the trash to the street, visitors and visiting hours, pets, etc.
Write a simple contract. Even if you rent month-to-month (which I recommend), you’ll need a simple contract. You want it to have the payment amount, monthly date to pay rent, etc.
A contract will help you evict the person if things don’t work out. Hopefully, it doesn’t come to all that, but people get scared when they have nowhere to live (and may try to stay).
Eliminate 90% of emotions. You have to separate your business side from your friendship side. If you can’t do this, then don’t even start renting rooms.
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If your friend comes home and says they lost their job, your response needs to be, “How will you pay rent?”
It sounds rude, but it keeps them focused on getting a job. Honestly, if people feel they can get a free ride, they will take it. You are helping them move to the next step of their lives by not enabling them to lounge around.
Yes, I am colder than most people, but I have seen these things play out in real life. If you have children, you know they can use you quickly. It’s the same with all humans.
Create a two-way forum. You want to keep your tenant happy because it makes you rich. Ensure that they can express ways to improve your home and environment.
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For example, if they say an espresso machine will be helpful, buy one for the common area. These luxury items are great ways to increase your rent when you add another roommate or replace your friend.
People will give you the best clues to make more money. Listen to your tenant; they will set the stage for increasing rent for the next customers.
Reward good behavior. You want to be an extra good landlord to your friends. Every few months, express your happiness with their upbeat attitude, cleanliness, and attention to detail.
You can buy them a bottle of champagne, or celebrate holidays like the 4th of July. If they are a good roommate, ensure they feel like family. Get them out of your house at the fastest possible convenience if they are wrong.
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Good tenants, like good landlords, are hard to find. You both need to strive to become better than yourselves. If your friend is doing an excellent job as a tenant, always give positive reinforcement.
Conclusion. There is so much money in renting rooms; it will blow your mind. However, it doesn’t take patience while everyone gets on the same page.
Renting rooms will be the number one way to increase your income over the next ten years. The writing is on the wall.
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The housing market is too high for the average person. People who bought big homes can’t afford them.
The recession will produce layoffs, and inflation will raise prices. We are moving into a financial hardship zone, and people don’t have time to work more hours.
The sharing economy is here to stay, and renting rooms is the most lucrative and least time-consuming method inside the sharing economy.
I will continue to pound the drum of renting rooms because it got me from -77,000 to over $250,000 today. If you do it right, you can become a millionaire in ten years. Good Luck!
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