Thursday, September 27, 2007

Housing Market Effect On Room Rentals

My wife and I had a short chat this morning, it appears that the housing glut in our area and the adjustable mortgages is causing more people to go the route we've been going for over a year, which is renting out rooms. This came to be a realization when last night one of our roommates wanted to give us a heads up that he may be moving out next month. One of his coworkers offered him a room to stay at for $200/month (I'm assuming utilities included, because that is our arrangement at $350/month for him). Math wise, the person must be desperate for money, if you consider utility costs alone for a person come out to about $60 (water, electric, heat, internet) in a shared housing environment (based on our experience). We are going to offer him $300/month and see if he is willing to stay, he was going to check out the place first before accepting the $200/month.

Another item we have noticed recently is several people from our church have independently asked about how we manage it, how much we charge, how we find renters, etc. They probably are going to be doing the same as us, but probably not at our scale of 4 rooms. I did a search this morning on Craigslist for under $300 in the Chicagoland area and I found a lot more than I have found before. Now some of those probably don't include utilities, but I found some that did.

We also decided to make our base rent be $300/month. The new roommate coming in after his first month, we'll bring him down to $300/month (he has the smallest bedroom). The couple moving in at $400/month, we'll bring them down to $350/month (largest bedroom). Our roommate that has been here for a year we will keep her at the $300/month. My goal for the coming year is that we average about $1K/month, which means we won't be able to have a vacancy every month.


Fabulously Broke in the City said...

Hope it works. My parents rent out rooms.. well A room in their house.. the only thing I'd really suggest is be careful of who you rent it out to (which I'm sure you already know ;) )

emma0076 said...

Hi. I think what you're charging is very reasonable. I also think the renter wanting to rent his co-worker's place should seriously think it over. Yes, it would be cheaper but he has to consider he'd be with his coworker all day at work, then together in the evenings in the same house. That much time together can put a strain on any relationship--and might hurt their friendship or worse, hurt their working relationship.

I also wouldn't counter offer with the lower rent until after he checks out the other space. It might turn out that the co-worker is charging a lower price for a reason.

missy said...

Are you close to Joliet? I am looking for a room to rent.

Sick of Debt said...

I am in Joliet, IL but we are blessed with a full house with no one planning on leaving just yet.