Houston, we have a roommate.

toilet bathroom

And so begins the life of three adults sharing one bathroom. Fortunately for me, I am the only male in the household and my understanding is girls are physically incapable of pooping, farting, or burping. Unfortunately for them, as a male I am not only capable of each of these things, but I have mastered doing all three at one time.

Too much information? 

Our roommate moved in on Saturday, which means for the first time in my life, I’m a landlord. Do I get to learn some secret landlord handshake now!? Before we bought our house, we were paying $1,200/month in rent. As homeowners, we have a $1,600/mo mortgage payment (PITI). Can you guess how much we decided to charge our tenant/friend?

You’re wrong if you guessed $9,000/month, although I like your ambition.

We went with $400, which includes all utilities and cable. We’ll obviously have to pay taxes on that income (unless any of you know of some legal way to get out of it ;)). Assuming we’ll net about $300 after taxes. Stupid IRS.

Of our $1,600/mo mortgage obligation, $1,200 gets thrown away in interest/taxes/insurance, and the remaining $400 goes to reducing our loan obligation. So by letting our friend live with us, we can nearly double our principal payments each month. How sweet is that? 

sweet snickers

Will we actually use this rental income for additional mortgage payments? Probably not, but at least it’s an option. For now, we’ll just use the funds to help make our home better. Like yesterday, when we dropped some mad benjamins on new carpet in the basement.

You ever been, or plan to be a landlord? 

23 thoughts on “Houston, we have a roommate.

  1. I have been a landlord when I owned a house and ended up living interstate. First tenants were a nightmare, but after that it wasn’t too bad. We did have the house trashed once, but kept their bond and it forced my husband to finally do some renovations.

    I like being a landlord and have considered renting a room in my current house. Still working up to it though as I like my space too.

    Congrats on the new tenant and status 😉

  2. Landlords for the last 2 years. Our tenants are amazing! We have the same renters that we started out with. We are stationed in Japan with the military and own our home in Nebraska so we decided to go ahead and rent it out instead of selling it 2 years ago when we moved. So far we have no regrets! They pay on time, no calls from neighbors, and apparently keep it ‘in shape’ no crazy things going on (my parents serve as the ‘property managers’ since we are 7,000 miles away).

  3. Yes, I have 3 tenants, but they don’t pay rent. It a big disagreement between my wife and I. She thinks it’s wrong that we ask our 3 children to pay us rent, I’m totally fine with it. 🙂 I guess I’ll just have to wait until they are old enough for jobs.

  4. Well, as long as the lady is nice and you have a great time together (not ‘that’ great :)), I see this as a good move. Any ‘plus’ money is good money in my opinion

  5. You can reduce your taxes on that income by allocating a certain % of your home as a rental. You can then charge utilities, mortgage interest, property taxes and depreciation against that income. Check with a local CPA for the details. It is an easy schedule E and will save you money. If he uses a third if the house a third of all your joint household expenses will net against that income.

  6. I may buy an investment property in the future but I am not going to rent out any rooms in my house. I have a friend who does and the results have been mixed. Besides, I like my person to bathroom ratio which is the inverse of yours.

  7. Another option (tax-wise) is to have said roommate pay all utilities, cable, etc – whatever totals $400. Then it is not technically rent 😀

  8. Good luck in the adventures of having a new roommate! Our eventual goal is to buy a rental property as a source of passive income – so no, I haven’t been a landlord yet but I do hope to be in the future. For right now, I’ll be jealous that you have a simple way of bringing in a bit of extra income for home improvements and potentially for paying down your mortgage with bigger principle payments!

    And you’re right, by the way. Girls totally do not poop.

  9. I’ve been a landlord for 5 years, and as of last month I’m up to 4 rental houses. (I own a fractional share of the first one, various family members own the others and pay me to manage them.) I love being a landlord. I average a few hours each month (some months, I only work long enough to drive to the bank) and net about $600 dollars. The best part is, because we own our share of the rental outright, the rent ALWAYS covers any work that I have to do on it. As a SAHM, I couldn’t imagine a better job! Then again, I don’t have to live with my tenants.

  10. Yes! I’ve done exactly what you are doing a few times.
    Don’t forget you can likely write off a portion of your home insurance, property tax, utilities relating to the % of space rented.

  11. Not a landlord no! But, I already am a landlady for a year now. My tenant is OK. I have a rental property in another city. I lived in that apartment for over a year and when I left my tenants moved in. Lately the real estate agent called to say, some people may be interested in buying the apartment which I had tried to sell last year but, it looks like there is no profit in selling it at the prices he told me. Besides, what would I do sitting on about USD 100,000? I could open a TL savings account which would generate 8,50% interest which is over my current rent but, as I collect rent, the value of the apartment does not go down. However, TL has lost at least 10% against USD just recently. The inflation will eat it up before I know it. Therefore, savings account is no option for that kind of money. I own my current residence free and clear so there is no mortgage. The bank loan I took out for the rental property is almost paid with 7 months left to go.
    I will keep the tenant as long as he keeps paying.

  12. I would be seriously surprised if you had to be income tax from renting a room in your exisiting home….that seems crazy to me.

    My only reference point is if you are renting and one person is on the lease, but collects $$ from other roommates…that’s not income that expense splitting.

  13. I don’t know about your state, but in my state if your home becomes part rental you immediately pay double on property taxes. For me that would only be an additional 100 dollars a month, but if you are only renting for 400 100 of that is a massive portion.

    Also if the rental payment is not within fair market value by the IRS then you are not able to deduct any portion against taxes.

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