Since I couldn’t manage to get my lease renewed at my current apartment yesterday, I went looking for a new place and I was lucky enough to come across an awesome house that is renting for less than my current rent but had more rooms. It then came to me to consider leasing the house and renting out the two other bedrooms at prices that would make my portion of the rent only about $200 total. In response I got a couple of really thoughtful comments, but one in particular from Dimples bent me sideways at the suggestion of my idea being mean.
In response to my article “Leveraging My Lease to Pay Only $140 a Month” Dimples writes:
For this to work, you have to find two people who would be completely oblivious to the fact that the apartment rents out $1640 and that both, together, are basically paying the entire rent. Do you really think you could find two people who wouldn’t even question that? Would you let them in on the actual breakdown of rent? Or would you just keep that information from them?
I am all for saving money but I think it is a little mean to cheat other hard-working individuals in order to further yourself. I can see you doing this to a corporation because they could give a rats-butt about us little people, but to do it to folks who are trying to make it in life just like you……definitely thumbs down.
The following is my edited response. Is my idea mean? I don’t think so:
Thank you for sharing your thoughts here. I can appreciate your advocacy of fair renting practices, but two things I should say about your “mean” comment. Primarily I think that our contrasting perspectives largely reflect our cultural differences, which is great because it gives us a chance to learn something new.
Let me just start off by sharing with you my own experience.
I’ve been renting for a good 10 years in the San Francisco bay area, and the whole rental market here seems rather cut throat. In those 10-years I’ve been lucky enough to join the fraternity of SF renters who have been kicked in the butt one too many times by exuberant prices, greedy landlords and unfair practice and I’ve learned many many tricks from the pros. My attempt at subleasing the other rooms is an amateurish scheme at best compared to what other folks have done. Dealing with the kinds of issues that commonly face renters in the Bay you’d be surprised at some of the things that might be considered acceptable among renters here where in other towns they might be considered “mean”.
Secondly, we differ on whether the subleasing of rooms for unequal prices is a question of fairness. I think when we’re looking at things from a sales perspective fairness is only limited to situations in where a buyer doesn’t have a choice — which is trivial because buyers almost always have freedom of choice. Selling a Nintnedo Wii for $1000 when it’s retail price is only $400 isn’t unfair. Selling a car for $4000 when it was purchased for only $500 isn’t unfair. It’s the buyer’s prerogative to find the dollar value in their purchase. The seller merely provides a service in exchange for money.
You asked me if I think I could convince people to pay nearly the full rent without disclosing the total rent cost to them. The answer to that is undoubtedly yes. When’s the last time you went to the grocery store and asked them how much they bought their apples for before you went and purchased those very apples? If you knew the apples only cost the store 4 cents each, would you still buy them at $1.99 a pound to give the grocer a $1.95 profit?
When retailers are pricing their products (which they originally purchased from a wholesaler/distributor at cheaper prices), do you think that they care about how hard people work to buy their repackaged crap? You might say I’m being mean to the landlord for making more money by charging per room then he does by charging per unit. Remove the issue of the lease, and that would make him the wholesaler and me the rental broker (retailer). There is nothing mean to be had about general economics.
If people don’t like the hypothetical prices offered for a hypothetical rental, then they can go elsewhere and find a hypothetically greater value for their dollar — That is of course their prerogative too.
To me this isn’t much different than buying a house that has mortgage payments of $1000 and charging renters $1600 to live there. The only difference in my situation — and I admit — I am purposefully and conveniently neglecting the issue of the lease.
I hope my analogy adequately illustrates my perspective here, but maybe not. I would be happy to hear from you if you have any feedback or further comments to share. ^_^
Thanks again to Dimples for sharing her thoughts!
May 6th, 2007 at 6:15 pm
We actually are in the similar situation, we bought a huge house with a mortgage of $1K and utilities of $335. We charge $400/month with all utilities included. This is the rate the market we live in will support. Our roommates have no idea how much the mortgage is, they are just happy they have a decent place to live at for a reasonable price. We currently have 3 roommates and planning on getting a 4th next month. That will come out to us having free room & board.
I view it that you are taking a risk, so by taking a risk you get a discount on your portion of the rent. Using your analogy, the grocery store takes a risk of buying the $0.04/lb apples, hoping they will sell them before they go bad. You take a risk that the roommates won’t pay or will move out, leaving you the rent to pay.
May 6th, 2007 at 7:31 pm
The concept of being mean hinges on one simple word: “Roommates”. As far as I’m concerned roommates are people you live with and have a bond (no matter how small, no matter good or bad) with. It is unforgivable to not let your roommate in on the whole story. I’ve been a roommate for the past 4 years now (with different people) and when it comes to money, everything was full disclosure. All the bills were located in a central location after mail was picked up and everything was reviewed.
Now if we speak about “Tenants” now, that’s a completely different matter all together. Here we have a purely business relationship. And they will pay whatever you charge and that’s that.
It is up to you how you want to classify these people. Although, for my part, I would find it hard to live with tenants, that’s just me.
May 7th, 2007 at 9:29 am
@Sick of Debt - You’re right on about risk. If you take the risk you reap the benefit, that’s what it boils down to. I think some folks are taking this the wrong way by looking at it from the position of “what if I were that other renter” — without realizing that this happens everywhere you go –especially if you rent a room from someone’s house or if you walk into a renter situation where there are already people renting. They’re likely to charge your more than what they pay. Maybe they’re just upset that they hadn’t thought about it themselves yet haha.
@Baz — I looked up roommate on dictionary.com just to make sure there weren’t any underlying assumptions being made:
I don’t think there is any question as to what constitutes a roommate. Surely the division of rent, where one person is the controller of the lease and others are not does not take away from the definition of roommate. I believe your definition of roommate to be more idealistic of communal living. But you do make a good point, maybe I should use the term “housemate” or “apartmentmate” since I am not sharing rooms. ^_^ And well since I neither own an apartment or a house then they can’t be tenants. But here’s a thing to think about, if the renters lived in the same house with the landlord would they not be his roommates? err housemates?
May 7th, 2007 at 4:13 pm
I agree with Baz L and her comparison of tenant vs. roommate.
Now for the whole grocery scenario. There is much more to that apple than meets the eye. The apple may have been worth 4 cents when it was still hanging on an apple tree. But a distinct process brought that apple from that tree and placed it in that grocery store’s fruit & vegetable section. And each and every step of that process increased the value of that said apple to that customer.
In plain English: I would rather pay $2.99 for a bag of red delicious apples at the grocery store than to drive to an apple orchard, get a ladder, climb up a tree, sort through lord knows how many apples to find some decent ones, drive back home, and wash the picked apples before I can even bite into one.
Now compare ALL that to your “plan”. What exactly are you offering your roommates that they could not do themselves? If you were to through in 3 meals-a-day, housekeeping, and free cable in the mix then I can definitely see your point. But your aren’t offering any incentives are you.
In today’s world, where folks don’t have time to visit apple orchards, a $2.99 bag of apples is the price of convenience. Getting stuck with 5 times more rent than your roommate pays, with no incentives, is not.
Dimps
May 7th, 2007 at 4:39 pm
@Dimps — It’s great that we can have dialogue about this because I’m sure there are many renters out there that are ignorant to this common practice. In response to your comment, I’ll just tip my hat on something that I was talking to my friend gidgets about today. Basically if a landlord decides to rent his property at below market rate, for whatever reason, and I can rent out the rooms at prices comparable to their market value then the only loss is to the landlord. Whether you rented my room or someone else’s you’re still paying $700 for the same room. It is my room afterall. If I want to share it I’ll rent it at whatever price I think it will rent for. ^_^ Sure it sucks to pay more for something that other people are getting for cheaper, but that’s life. If you don’t like my room available to you at the price I am offering it for, simply go elsewhere. How hard is that?
I could keep all the rooms to myself and not give anyone a place to live in a very prime location, but then that wouldn’t be very nice either would it?
May 10th, 2007 at 9:51 am
Just to put my one cent in for the readers to know. In my personal opinion, I think it is wrong. If he owned the house, I wouldn’t think it’s wrong.
It’s not illegal so he can do what he wants. But I just gave him one piece of advice: Don’t let them ever find out.
May 16th, 2007 at 2:27 pm
[…] + From the Editor A curious topic — is it ok to charge your ‘roommates’ more than what you pay? Add to the discussion: » Millionster [Leveraging My Lease to Pay Only $140 a Month] » Millionster [If You Knew That Apples Only Cost 4 Cents] […]
May 16th, 2007 at 9:05 pm
@Dimps:
HEY HEY HEY!! Baz L is not a “her”… lol
Hey Juan, can you edit this comment please??? lol
@Mil
It just feels wrong to me, that’s all. For the past few years all my “Roommates” have been people I’ve known before I’ve gotten into the living situation. They’re not friends, but still. I guess people really are friendlier in Texas, lol…