- Review the fine print of every contract and know what you are entitled to or responsible for.
- If bringing a roommate in, you should thoroughly vet him or her, including background and credit checks.
- Plan ahead, and go over all of the rules ahead of time, as well as checklists and inspections so that everyone knows what their responsibilities are.
Having been in real estate for 30 years as a licensed agent, I understand the desire an agent feels to help out and, more importantly, to look out for the best interests of clients. However, sometimes even with the best intentions, a client you helped rent a place might find himself or herself at odds with the landlord and wants to sublease or might suddenly need to find a roommate — or replace one.
Here are four common mistakes someone in your client’s position should be aware of and which you could advise them.
1. Not going over the contract extensively
Before he or she signs the lease, go through each section to ensure that he or she can legally have a roommate. Your client should communicate with the landlord that he or she is interested in having a roommate, so the roommate can be added to the contract — and thus held to the standard and terms that have already been agreed upon.
If the client is allowed to have a roommate, be sure to create a list of all the details for the roommate, this includes parking space, utility bill breakdown, house rules, and of course, the rent split.
Be sure the roommate agrees to and understands this contract. In other words, communication with your roommate and landlord is key.
2. Not doing a walk-through before signing a lease
Your client should always do a walk-thru before signing the lease. During the walk-through, he or she should make sure all systems are operating, look for cracks, stains or anything that can be considered damage.
Take notes and pictures as you go through the property. I would recommend creating a second walk-through checklist that your client and the new potential roommate each sign or have the new roommate sign the original checklist.
3. Not having renter’s insurance
As a multifamily property investor, I find that many renters do not carry renter’s insurance. I highly recommend finding a good carrier and spending the money on a good policy.
Renter’s insurance is especially useful when having roommates as mishaps can and will happen. A good policy might cost as little as $12 to $15 per month, but it will cover a replacement of your TV or laptop if it is stolen or damaged by a leak (many leases carry a clause that the landlord is not responsible for your personal property if it is damaged by a leak).
Many policies will also cover property loss even if it was off premises, so if your car is broken into and your laptop is stolen, it might be replaced. Some renter’s insurance policies might even cover you if your dog bites someone in the park.
4. Not screening your prospective roommate
If your client is going to sublet a room, be sure to screen the potential roommate even if it’s a friend of a friend because the friend might not know the true reason this individual is looking for a new place to live.
A thorough tenant screening, which often includes a credit check, criminal background and an evictions and liens and judgements search, might help shed some insight as to the renter’s motivation for moving to a new home.
Renting a great place to live can allow your client to create an environment in which he or she can excel. But don’t take short cuts when looking for a roommate as it can make a new home a living hell. Following the tips above can help save time, effort, money and lots of headaches for landlords, current and prospective tenants. And today’s renter is most likely tomorrow’s homeowner. Provide value now.
Joe Killinger is the CEO of theRRD. Follow Joe on Twitter or LinkedIn.
