Boarders: The Latest Trend in Renting?

Boarders:  Real Estate’s Perfect Strangers
House-sharing makes financial sense

by Mary Umberger,  Inman News

Editor’s note: Inman News welcomes Mary Umberger, a longtime real estate writer, to our roster of accomplished columnists. She describes her new weekly column as a “straight-shooting, tales-from-the-trenches look at the ins and outs of residential real estate.” We hope you enjoy it!

Boarders — once the stuff of Depression-era cartoons and 1950s TV sitcoms — are back.

It’s a sign of our economic times that more homeowners, looking to relieve financial stress, appear to be looking for someone to occupy a spare bedroom in exchange for monthly rent. And although having “roommates” is nothing new, recession-era realities are redefining the players and the living arrangements.

“Ever since last August or September, when the (stock market) crash really hit, people who had never thought of it before started looking at that extra bedroom as a source of income,” said Jacqueline Grossman, home-sharing coordinator for the Interfaith Housing Center of the Northern Suburbs in Winnetka, Ill.

For 13 years, Grossman has been matching homeowners who have that spare room with people who need a place to live. Although she and others knowledgeable about the boarding phenomenon say that broad data is nonexistent, she says demand in her own area is way up and the demographics of the participants are changing.

Others who run similar home-sharing services agree, and it’s particularly noticeable in areas where housing is costly.

“Probably 90 percent of the home providers we work with are looking for extra income, and in this area they can get at least $600 a month in rent,” explained Laura Fanucchi, associate director of HIP Housing in San Mateo, Calif., a nonprofit that matched 308 homeowners and boarders in the fiscal year that ended June 30 — a 20 percent increase over the prior year.

A bigger surge, she said, was the number of homeowners who contacted her group, offering to rent out a room — that was up 29 percent over the year before.

“People are struggling with their mortgage costs, or perhaps they’re in jeopardy of losing their homes,” she said. “It’s not uncommon that we see people who have $3,000- or even $5,000-a-month mortgages.”

Grossman said she’s hearing from would-be landlords who generally fall into four categories.

“Nowadays, we have people in their 50s who retired early, thinking they could live on their investments,” she said. “Then the crash came, and they’re living on half of what they thought they had.”

Others are homeowners caught in the slow real estate market, she said.

“They’ve had their houses for sale, maybe for two years, and they have to continue paying the mortgage and taxes,” she said. “They’re looking for somebody who is extremely neat because the real estate agent is still going to come through to show the house.”

A third group is frail, elderly people trying to continue to live independently, who want someone who can help with household chores such as grocery shopping, often for reduced rent, she said.

“Then you have the regular homeowners who are struggling to pay their utilities, their household costs and taxes,” Grossman said. “They’re just trying to hang on to the house.”

The people looking to move in have changed, too, indicative of the reality of the job market, she said.

“They often are leaving their homes and husbands or wives and kids,” in order to take a job in a new community, she said. “They’re going home every other weekend, and they may be looking for an affordable place to live while they work on a contract.

“We’re also seeing people of middle income — social workers, librarians, first-year nurses who could afford a market-rate apartment but could never put any money aside if they did,” so they’re seeking a cheaper alternative, she said.

And so, the “For Rent” signs are going up — but they shouldn’t unless there’s been a lot of forethought, according to those who have done it or advise would-be landlords.

Lois, a restaurateur in West Palm Beach, Fla., who asked that her last name not be used, recently rented out a bedroom to a man who was going to be in her area for four months on business. Though the arrangement worked out well, she found the interviewing and screening process somewhat daunting.

“It was a chance we took,” she said. “You’re letting somebody into your home. It turned out to be a neat experience.”

She said she interviewed the man extensively before agreeing to rent to him and ran a background check. Lois said she found him through classified-ad site, which has reported that ads from people seeking roommates increased by more than 70 percent nationwide in the past year.

Lucio Sanchez recently opened his 1,900-square-foot house to a local community-college student, who pays $400 a month. He says it’s going well.

The Des Plaines, Ill., computer network consultant said he once was a boarder himself, so he had an idea of what to expect and specified the rules in great detail: “For example, if they’re going to have visitors, what time they can come over, when they can have a party, etc.,” he said.

“There’s a month-to-month lease that has all the details.”

Sanchez handled the leasing arrangement himself, but the apparent demand is spurring apartment-rental agencies and even some real estate agents to offer matchmaking services.

Grossman’s and Fanucchi’s agencies are members of the National Shared Housing Resource Center, a nonprofit that maintains a nationwide directory of local groups.

Fanucchi agreed that the key to a successful matchup is that the participants delve deep into the home-sharers’ mutual expectations beforehand.

Her organization, which interviews the participants, requires that renters verify income and provide identification and references.

In addition to suggesting that homeowners ask candidate renters many basic questions about such things as smoking habits and typical work schedules, the organization also furnishes a list of things to inquire about — including telephone use, drinking, visitors and stereo volume.

Others suggest that would-be landlords also investigate homeowners insurance issues and possible zoning prohibitions.

“Bottom line, get everything in writing,” advises New York attorney Richard Frome, who heads an American Bar Association subcommittee on specialty leases. “It doesn’t have to be a formal thing — it can be like a bullet list. Say, ‘You can use the kitchen as much as you want’; ‘You agree not to watch television after midnight’; ‘If you use the dishes you agree to wash them,’ that kind of thing.

“Then, if there’s a dispute, you can say, ‘See, this is what you agreed to.’ ”

Mary Umberger is a Chicago-based freelance writer.
Copyright 2009 Mary Umberger

See our four-part series, How to Draft a Solid Lease Agreement.
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