Well I spent a good chunk of the morning trying to negotiate the lease with my apartment manager and it’s no surprise that they were unwilling to give me a reasonable price. Sorry charlie, that means I’m outta here! I challenged them on the basis of principle to see if they truly valued their tenants, and as it turns out money wins again.
But hey, things always happen for a reason — immediately I took to looking for a new place and low and behold I find a 3-bedroom duplex which is 20$ less than my 2-bedroom apartment. Very handy. That means I can rent out the other 2 rooms at a very marketable price and only have to pay $200 rent myself.
The only problem is that unit is available on May 15th and my lease doesn’t end until Jun 22nd. What to do, what to do…
So I took to posting a pre-interest ad on my favorite rental listing site to see if I could entice any bites. I’d really only need to find the two other people to move into the duplex on May15th to hold it until I move out of my place. Aren’t I a genius? Alas, a lot of this hinges on hypothetical ideal turnout. So far I’ve only gotten one bite from a local college student, but my ads only been up for 20 minutes.
Just for comparison sake let’s take a look at the numbers:
Current Pad: 1100 sq ft, View of downtown, near everything, vaulted ceilings, two stories, 1 entry-way, no balcony, no storage, 2 bedrooms, 2 bathrooms
$1664 - Split with a roommate that pays $850 — my rent is about $800.
Wanted Pad: 1025 sq ft, suburban tree-ish view, near everything, regular ceilings, two stories, 3 entry-ways, 2 balconies, 1 private yard area, plenty of storage, 3 bedrooms, 1.5 bathrooms.
$1640 - Split with 2 people who pay $750 — my rent is $140
Don’t think I’m crazy ok? I can afford to pay for these on my own. But I’m all about saving money so bare with me.
– Let’s see how this one turns out!
May 5th, 2007 at 1:23 pm
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May 5th, 2007 at 5:09 pm
A couple of issues present themself to me:
1) Will you be the only person on the lease for this 3 bedroom 1.5 bath duplex? So in effect you will be the primary lease holder and subletting the two rooms to your roommates (who will each pay you $750) and you will then be the one writting the $1640 monthly check to your landlord?
Make sure your lease allows you to sublet those rooms. Hopefully your two roommates always pay the rent - since you still need to pay that $1640 ontime. You will need to write sublet leases with your roommates to make sure you formalize your financial obligations to each other. If your primary lease does not allow subletting and you go ahead and try this anyway - you may find yourself in a world of financial hurt.
Make sure that $1640 rental price is for three adults. Depending on what utilities the landlord is paying and how much wear and tear he thinks three people will cause, the rent may be higher.
Make sure three unrelated adults occupying that duplex does not violate the nonrelated adult ordinance for your area. Most places allow up to four unrelated adults to occupy an apartment. But if each of your two new roommates suddenly wanted girlfriends to move in with them you could be in violation.
2) Your current apartment has two full bathrooms. You will be downgrading to a 1.5 bath place but will have three people living there. So paying just $140 a month in rent sounds great - but you will now be waiting in line in the mornings to get your shower. As the $140 guy - I assume you will be in line behind the two $750 guys.
If you can find a landlord that is happy to remove the standard no-subletting clause and you are willing to take on the risks of being a sub-landlord to your roommates - go for it.
May 5th, 2007 at 5:32 pm
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.
May 6th, 2007 at 11:04 am
@Jane Dough - Great feedback. Yes indeed, in this situation I would be the primary lease holder. To address the other points you brought up, for a 3bdrm townhouse I believe the adult occupancy is upwards around 6 persons or 2 per room. The benefit of being the primary lease holder is that you get to make the rules! I won’t be allowing any random girlfriends to take hospice. Ultimately, I make sufficient money to cover the rent so I don’t so much need roommates, it just makes life easier while I’m saving up to buy my house ^_^. About the 1.5 bathroom downgrade: I don’t mind sharing the bathrooms at all. I’ve shared living space with 30 fraternity guys so suffice it to say I know what communal housing is all about. The other place is undoubtedly a downgrade overall: it doesn’t have modern appliances and isn’t lined by palm trees. But I think that the total gain is worth a shot. I’ll have to take a second look at the warnings you’ve shared to see if I can work it out. Thanks for sharing your thoughts.
Let’s see how it goes.
May 6th, 2007 at 11:21 am
@Dimples - 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”. I can assure you that my desire to get ahead is by no means a reflection of meanness.
Secondly, we differ on whether the subleasing 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. 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?
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? Remove the issue of the lease, and I am essentially a rental broker. There is nothing mean to be had about general economics.
If people don’t like the hypothetical prices I offer for this hypothetical rental, then they can go elsewhere and find a greater value for their dollar — That is of course their prerogative.
To me this isn’t much different than buying a house that has mortgage payments of $1000 and charing renters $1600 to live there. The only difference in my situation — and I admit — I am purposefully neglecting the issue of the lease.
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.
May 6th, 2007 at 12:17 pm
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May 16th, 2007 at 2:26 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] […]