With the rising cost of living expenses, many people are considering either operating an income-producing property from the same property where they live or becoming a live-in landlord in their own multi-unit building. There are certainly advantages and disadvantages to both options. Understanding what is involved in being a live-in landlord and what you should expect can help you to decide whether this is the right option for you.
Advantages of Being a Live-in Landlord
- You have the opportunity to monitor tenant behavior and immediately nip problems in the bud before they grow worse.
- It's easier to track down tenants for rent collection purposes.
- You can benefit from owner-occupied insurance policies, mortgages, etc.
- You can subsidize your living costs with income from your tenants.
- Undesirable tenants may reconsider when they learn the unit is owner-occupied.
Disadvantages of Being a Live-In Landlord
- Noisy tenants on the same premises can be problematic.
- Tenants may take advantage of the opportunity to report problems at all hours.
- Tenants may not maintain common areas in an acceptable manner.
- When you have an issue with a tenant, it makes it more difficult if you live next door.
- Not all of your expenses will be tax deductible.
There is no doubt that being a live-in landlord can work. There are many landlords who find this type of arrangement to be perfectly acceptable and make it work for them. Nevertheless, there can obviously also be problems. If you decide to give being a live-in landlord a try, the following tips can help you to avoid potential problems.
Establish clear guidelines and rules regarding what is expected of your tenants. Live-in landlords may be tempted to make adjustments to their rules when they live on the property. Keep in mind; however, that unless your lease is a month-to-month, it is important to stick to the rules outlined in the initial lease that you signed with your tenant.
Set out expectations regarding acceptable times for reporting non-emergency issues. This will not guarantee that a tenant will not knock on your door at 2 a.m. to report something that could just as easily have waited until daylight, but it might help.
Address small problems with your tenants before they escalate into big problems. Since you have the benefit of being on-site, you also have the benefit of noticing issues when they first pop up. Save yourself a lot of hassles and take care of problems when you first notice them. Addressing problems early can save you money later on and will help you to earn the respect of your tenants.
Respect your tenants' privacy and ask that they do the same for you. Although you might feel as though you have the right to constantly check on units, especially since you are living there, you may be required to give notice before entering a tenant-occupied space. Be sure to check your local laws to determine how much notice you must provide before entering.