The co-living operator playbook

Setting rent for each room

Price rooms the way renters compare them, not as equal slices of the house.

Start from the house, not from a guess about rooms. Work out what the whole house would rent for to one household, then check that renting it room by room clearly beats that after you pay the utilities, the internet, the cleaning and the furniture. If it does not, the extra work is not paying you.

Then price each room on what a renter actually compares. Two bedrooms in the same house are rarely worth the same. Set one base price for an ordinary bedroom and add a premium for each thing people will pay more for, so every price has a reason you can say out loud.

• A private bathroom is usually the biggest premium in the house
• Size and closet space come next, then a window that opens and natural light
• An assigned parking space is worth charging for where parking is tight
• A room next to the kitchen or the front door is worth less than a quiet one
• Look at what similar rooms nearby actually rented for, not the asking price on the nicest listing
• Say in the listing whether utilities and internet are included, because renters compare all-in prices

Revisit prices when a room turns over, not in the middle of someone's lease. And be careful about cutting the last empty room's price deep to fill it: the new resident's rent becomes the number every housemate compares theirs to.

Screening housemates

Written criteria first, the same questions for everyone, and the final call is yours.

A bad fit in a shared house costs more than a bad fit in an apartment, because four other people live with it. The answer is not a gut feeling at a showing. It is the same written criteria, published before anyone applies, and the same questions asked of every applicant.

Write down your standards: income (a common standard is gross income around three times the monthly rent), rental history, references, and your policy on background checks, following your state and city rules on how criminal history may be used. Share them with every enquiry before anyone pays an application fee.

• Ask about the tenancy, not the person: work or class schedule, smoking, pets, overnight guests, vehicles and parking
• Show every applicant the house rules before they apply, and ask whether they can live by them
• Call the previous landlord and ask one direct question: would you rent to them again?
• Let current residents meet a finalist if you like, but do not let them veto anyone; the decision is yours and it must rest on your written criteria
• Never ask about or decide on race, color, national origin, religion, sex, familial status or disability, and check which other groups your state and city protect

Fair housing law applies to room rentals. Some narrow exemptions exist, for example for certain homes the owner lives in, but they are narrower than most landlords assume, and they never cover discriminatory advertising. Do not rely on one without local advice.

Splitting utilities

Pick one method, write it into every lease, and split by the days each person lived there.

There are three ways to handle utilities in a room rental, and the right one depends on how much risk you want to hold. Whichever you choose, it goes into every lease in the house in the same words.

• All in: you pay every bill and build a normal month into the rent. Simplest for residents, but a hot summer or one person who never turns off the heater comes out of your profit
• An allowance: you pay the first set amount each month, and anything over it is split between the residents. Residents get one predictable price and you are protected from a spike
• Split every bill: residents share each bill. Fairest on paper and the most work, because every bill becomes a conversation

When residents share a bill, split it by the days each of them lived there that month, not evenly. In a house where rooms turn over often, somebody moves in or out in most months, and an even split charges the person who arrived on the 19th for a full month of power. Show the bill on request, and keep the internet in your own name so a resident moving out cannot take the whole house offline.

Handling turnover

Every empty day costs a day of that room's rent, so start the next move-in the day notice arrives.

A room at $600 a month costs you $20 for every day it sits empty in a 30-day month. Rooms turn over more often than whole houses, so the speed of each turnover matters more than the price of any one room. The work is the same every time, which means it can be a checklist rather than a scramble.

• The day notice arrives: confirm the move-out date in writing and list the room with its available date
• While they are still there: pre-screen enquiries and show the room with the notice your lease and state law require
• Move-out day: walk the room with the move-in photos beside you, collect every key, and change the door code
• Before the next resident: clean, fit a fresh mattress protector, check the smoke alarm, and reset the storage space
• Deposit: send the itemized statement and any balance inside your state's deadline
• Move-in day: a signed move-in inspection with photos, the house rules, their cabinet and fridge space, the cleaning rotation slot, and the internet details

Enforcing house rules

Write the rules down, enforce them early and in writing, and never make housemates the police.

Most problems in a shared house are missing-rule problems, not bad-tenant problems. A rule nobody wrote down cannot be enforced, and a rule enforced for one person and ignored for another stops being a rule. Put the house rules in writing, make them part of every lease, and apply them the same way to everyone.

When a rule is broken, act on the first time, in writing, with the date and what was seen. A short written warning early is kinder than a notice to vacate later, and it is the record that makes the later step stand up.

• Dishes left out: the rules name a time window, so the complaint becomes a yes or no
• Food going missing: assigned shelves and cabinets, by bedroom
• A guest who has quietly moved in: a guest night limit and notice to housemates
• Thermostat fights: residents agree a temperature, and you set the range if they cannot
• Noise: quiet hours written with actual times

Deal with the rule, not the personality, and talk to the resident privately. Never ask housemates to enforce anything; they will stop reporting problems. If it reaches a notice to vacate, the notice has to follow your state's rules on timing and delivery, so get local advice before you send one.