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Renting to Multiple Occupants Can Be Sticky

Renting to Multiple Occupants Can be Sticky I received a call from a young man on a house that I currently have available for rent. I always ask a series of questions when a prospective tenant calls on a property.

I asked how many people would be occupying the property. He told me 3.

Is there one person that earns enough money to cover the monthly rent?

He indicated that the rent would be split three ways and each occupant would pay their portion to the landlord.

Unfortunately, I don't care for situations like this. As a landlord, I do not want to collect money from 3 different people living in the same house. Sometimes one party has their money and one of the other parties or both of other two don't. I want one check, from one person, covering the entire monthly rent. They can work out the money amongst themselves and figure out who owes whom what money.

What happens if one of the occupants decides to move out? Then, the other two don' t have enough to cover the rent? In turn, they have to sublet the house to someone else so they can pay the bills. This can turn into another precarious situation.

Years back I purchased a rental, with the tenants in place, on a month to month lease. They were roommates. When I went to pick up the rent, one occupant would have half of the rent, but the other wouldn't have her half. This went on for another month. It was like pulling teeth. Neither wanted to be responsible for pulling together the rent and paying in one lump sum. I told them they needed to have it figured out by the following month. They could bicker amongst themselves over the money. They did begrudgingly figure it out, and I received one check from then on for the rent.

Be careful when renting a property, that you know exactly who will be paying the monthly rent. Stipulate in your lease who the responsible party will be that pays the rent. Otherwise, you may be treading on thin ice.

This article is authored by

Sandy Shores REALTOR®, Melbourne/Palm Bay FL Real Estate

Brevard County Real Estate & Investing

I also buy, sell, rent, own and manage Investment Property.

Posted by Sandy Shores, Melbourne/Palm Bay FL, Brevard County Real Estate & Investing on 06/25/2009 05:48 PM

Comments (24)

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Originally posted at: Melbourne Real Estate News, Brevard County Florida by Sandy Shores Melbourne FL Realtor: Renting to Multiple Occupants Can Be Sticky

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24 Comments on Renting to Multiple Occupants Can Be Sticky

JUN

Do these people think this is a restaurant and they can have separate checks? I wonder how they plan on dividing up the phone bill along with the electric and water.....I can hear it already, I only take one shower a week, so I shouldn't have to pay a third of the bill. People kill me.

Hi Michelle, I have one house, so I like to receive one rent check, it makes life much easier.

It is common in some cases (student housing) to have separate leases for each occupant. Are these students? You could get each individual lease co-signed by a parent. Pain in the back side but at least you are safer from a credit perspective.

Smart post, Sandy. Having one person responsible for the rent make sense. You shouldn't have to collect from all three parties. It's something that needs to be worked out amongst the roommates.

Sandy, you have the only policy that works and that is to get the rent from one source! Kudos to you for standing your ground!

Sandy, As a young service man in Hawaii, we rented a beautiful 5 bedroom house with a pool and a view. There were 10 of us and I was responsible for the rent check. The landlord required a full month rent upfront,a security deposit, and a thousand dollar check to be held in a interest bearing account.

All went well until people got transferred and we couldn't replace them. We soon had lost 5 renters and went to the landlord to end our relationship.

We never lost a penny and were rewarded the full deposit including $1200 from the interest bearing account. We also received 5 letters of recommendations to other landlords.

This landlord explained that she had been burned by so many renters that she appreciated our conduct and maintenance...

It pays to have the one check system...

Hi SS,

No one in her right mind would allow 3 people to pay the rent separately. Get 'em tiger!

Yes, that makes it less of a sticky situation. Sometimes by owners allow more than one so they can get more security deposits.

Sandy,

I can see how this could be a difficult situation.

Ann Hayden in steamy Wildwood, Missouri

JUN

Once I learned what to look for I quit getting burned. We have been lucky as to have great tenants in our own IP. This is great info for new landlords.

Sandy, would it not be easier to hire a management company for your rentals to handle this so you can relieve yourself from the headaches?

Thom, I am renting one house, which requires one lease and one rent check. No co signers for me. I want the person that is going to be living in the house to be responsible for the lease and no one else.

Heather, I like all of these details ironed out up front, so it is understood. It makes life easier.

Caren, I know this system certainly works best for me.

Hi Paul, As a young military man you all must have kept the home in tip top condition. Military transfers cannot be helped, they are indeed, a fact of life. It sounds like you had a wonderful working relationship with this great landlord!

HI TO, 3 separate checks indeed make it a headache.

Monika, It can be sticky.

Hi Ann, Yes, it can be difficult.

Hi Laura, I always learn from my mistakes, and try not to do the same thing more than once. That's key.

Hi TOTO, Clients hire me to do the management on their properties. (I take them depending on the property, the owner and the price point.)

And, I prefer handling the rental/tenant aspects of the business on my properties, myself. I prefer placing and dealing with my own tenants. For me, after so many years of doing it, I have found what works and doesn't work.

Personally I don't like these roommate situations. I even hesitate to rent to unmarried couples if they have never lived together before - they always tend to break up within a few months of moving in and then one or both want off the lease.

My son leased a house with two others when he was in University. The landlord had a very tight lease agreement.

1) there was an overall umbrella lease to cover the whole house,

2) then each tenant had an individual lease. If one tenant moved out that person was still responsible to pay his portion of the lease unless they sublet with the landlords approval.

This was very ironclad.

In Ontario however, the Landlord Tenant act prohibits a landlord from preventing more tenants to move in than actaually on the lease because "situations change".

Jointly and severally and each occupant needs to qualify for the WHOLE house rental payment....sharing may be a matter of economics for them individually; however, it should not impact the landlord in their ability to qualify or collect the scheduled rent.

Yes, it has to be one lease for the whole house, since it will likely prove hard to re-rent a portion of an undivided space with one or two existing tenants already there.

Funny! You're reading my mind! I just had a lease scenario like this. I did the same thin. Who has the job that can hanlde the rent? Do you have the credit -of course I did a credit check. That person is responsible and that person gives the rent check every month. The other two people are listed on the list as additional occupants and they cannot be changed without my approval. Good post!

Hi Sandy, If I had only known you in 1994! LOL!! Your approach is the safest and sanest! The "boarding house" approach will drive anyone bonkers.

JUN

Good point about finding someone that can be the primary so to speak and have them be able to afford it on their own. That way they are the landlord from their own roomies. Your right, always too much nonsense with multiple tenants. Good post & I'll remember this one.

Rob, I don't particularly care for roommate situations either. Often times too much drama and chaos - and people coming and going. Certainly not my favorite scenario.

Diane, Interesting, thanks for stopping by.

Wallace, I believe that one occupant must be the responsible for the lease, and the occupants can hash out the economics of it all themselves.

Cathan, Love the point you've made. If one tenant moves, how can you rerent a portion of a house. Thanks.

Hi Mary, I think everyone that has had a rental, has had an experience they have learned from, and will remember not to make the same mistake in the future.

Hi Lyn, Thanks. I want to deal with one person per house, not 2 or 3 on one house.

JUL

Sandy. Very true. I had a similar situation on one of my rentals. It is always better to deal with ONE Qualified renter. Anything else would be Just Uncivilized.

JUL

It looks like we might be renting a house out to a few college roomates come August I told them the same thing. One rent check. I can't imagine collecting rent from multiple people in one house. It's hard enough collecting from some tenants.

Mark, It is better to deal with only one tenant. Less headaches.

Justin, One check is good- otherwise it can be a recipe for disaster. Good luck to you with your new tenants.

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