I was reading an internet article from Smart Money about a new website launching in early March that may be suited for homeowners that still want to make some extra cash from their house, but don’t like dealing with roommates.  The website is called Parkatmyhouse.com.

From the name, you can already get an idea of the concept behind the site.  It’s basically a way to advertise your driveway space for commuters.  Initially, the idea doesn’t sound right, because urban downtown landscapes aren’t filled with single family homes with drive ways.  Upon further reading, the article details specific cases such as sporting events and commuter lots where the number of riders exceeds the number of available parking spots.  The article links to a Wall Street Journal Article citing one specific instance from my neck of the woods in CT.  The Metro North Rail network runs along the South Eastern corridor of CT bringing in commuter to NYC.  To ride the train, commuters must first get to the train station and most of them do so by driving their cars.  The public parking spots are in short supply with the growing number of commuters.  It’s specific cases like these where Parkatmyhouse.com will flourish.

Apparently the site is already a hit in London.

where more than 20,000 property owners earned money off their concrete.

The brainchild of the site, Anthony Eskinazi was inspired to create the site after his frustrations with parking at a San Francisco Giants game.

Parkatmyhouse.com is not active in all major areas.  So far, it’s available in Philly and D.C.   If you enter your zip code and sign-up, they’ll let you know when they’ve got enough spots to launch in your area.

I’ve been running this blog for about two years and thus far received numerous e-mails on a whole range of topics.  Out of all these questions, there’s always been one reoccurring question from readers and it’s along the lines of: how do I start out or how do I find roommates.

These are all very good questions.  I’m very glad that people are taking advantage of their spare room to put themselves in a better financial position, which is why I’ve taken the time to address everyone’s question individually.

But to efficiently answer the same reoccurring e-mails, I felt compelled to write a “Quick Start Guide” book detailing the first step to a newbie “live-in landlord” who may be thinking of renting out their spare room.  This guide goes through a little bit about my history and how the blog all started.

So without further ado, here’s the “Quick Start Guide.”

The highlights of the Quick Start Guide contains insights to:

• The first step
• Litmus test to determine if you’re ready

I’ve called it the Quick Start Guide because it’s not a rapid approach to making money, but a crash course to decide if you’re ready to become a “live-in landlord.”

The Quick Start Guide book is free provided that you signed up for my mailing list.  For those that have signed up already, you should have been provided the Quick Start Guide.

Please Download the guide.  Any feedback is appreciated.

Thanks
Mike

It happens several times a week, it requires me to sit in front of a computer and constantly pour over numbers.  I guess you can say I have a bit of OCD in me.  I have never tracked the number of hours I log, but I’m a bit obsessive when it comes to tracking my monthly budget.  I’m the type of person that likes to ensure everything is going smoothly.  I even track anticipated expenses months out to ensure that I have the cash flow now to pay for those expenses.  No other normal person does this. At least  I think.

I’m a planner and I have a fixation for numbers.  That’s the best I can explain it.

And as some of you may know, I charge a fixed rate for the monthly rent price, which is the way I have operated ever since the beginning of this venture.  The reasoning was that I can have my roommates automate their rent payments into my bank account because there is no need to wait and split the utility bills every month.

One of the downsides to this pricing scheme is that when one of my utility bills increases, I can’t pass it down to my roommates immediately.  Nevertheless, I still stood by it because I wanted the convenience of receiving the rent money without “going” after it.  For instance, as I’m writing this today, 2/2/12, both roommates have paid their monthly rent on time.

THE SHOCK OF THE MONTH

As I was obsessively checking my budget this month, my cable bill took me by surprise.  Despite my package being the bare minimum – consisting of only the internet and expanded basic channels – I was absolutely shocked the bill amounted to $117.15, an increase of 12% from the prior year for the same month.

The break down of the $117.15 is as follows:

• Internet – $46.95 plus taxes
• Expanded Cable – $61.95 plus taxes

Since I collect a fixed price rent, I can’t just tell my roommates, “hey, by the way, the rent’s going up by such and such next month.” Although, my basis is justified, it just doesn’t work that way.  I have to give advanced notification of such change and in writing or at least e-mail.

I would feel this could bring about some negative feelings.

Instead, I told my roommates, I would be cancelling the Cable TV because I felt neither my roommates nor myself watched enough TV to warrant paying for the cable TV service.  I would, however, still be paying for the Internet as we’re all online simultaneously.  After a brief conversation, both my roommates expressed no disappointment over the impending cancellation of the cable TV service.

A LA CARTE: THE MATH WORKS OUT TO BE CHEAPER

On the other hand, had my roommates complained about the loss of cable, I would have probably implemented an a la Carte option.   By this option, I would try to accommodate them by purchasing each episode of their favorite TV show.

Online services such as Amazon instant Video, Apple iTunes, and Hulu Premium syndicate TV shows for a cost.  I know Hulu premium is $7.99 a month.  I could sign-up for this account and theoretically share my login information with my roommates.

Alternatively, iTunes sells TV shows at $2.99 per episode.  If I happen to watch only one show a week, you’re only paying $11.96($2.99 x 4 weeks) per month, which is cheaper than paying for Cable TV.

DOWNSIDE TO THE A LA CARTE SYSTEM

The only downside I can see to this a la Carte method is when it comes to live sporting events such as the Super Bowl.  A solution can be to view the game at a friend’s house or a sports bar, which will make the game more enjoyable to watch.

With the Super Bowl on Sunday, I won’t disconnect the Cable Service until Monday.  Not that it will make a difference as my roommates are not big sports fans.  They may still, however, watch it because of the commercials because it will be the talk around the water cooler on Monday.

After this experience, I know what a company now faces when they have to “water down” their benefits while trying to keep customers or employees happy.  I’m just thrilled that I was able to cut an expense without much resistance.  The opportunity doesn’t happen often.  So I’ll what I can get.

Now each time when I obsessively track my budget, I now have an extra $60 to work with.

My question to everyone: has anyone here gone the a la Carte method to TV shows?

 photo credit: robynejay

The Super Bowl weekend goes into high gear in just over a week from now.  Major sporting events like the Super Bowl often create demand for hotel rooms that outstrip the supply.  Even with hotels charging a premium for such major events, they still have no problems booking them to full capacity.

The Indy Star reports some Indianapolis residents recognized the short supply of hotels rooms saw it as an opportunity to make some quick cash by renting out their spare bedroom for football fans attending the big game.

I’m not surprised that people are taking advantageous of the opportunity.  But what I’m surprised about is just how much money these residents are literally raking in during the course of the weekend.  A homeowner living 10 minutes away from the stadium stated that “she signed a deal with a California tourist for $2,500 a night for three nights, but she sweetened the deal by offering to chauffeur the renters around town.”

$2,500 a night, let me repeat that again, that’s $2,500 a night for a total for $7,500 dead presidents for the weekend.  That’s more money than what some homeowner’s will make renting out their spare room for an entire year.

The article goes on to say homeowners are using sites such as: AirBnB, VBRO, and HomeAway to advertise their extra room to tourist in town for the Super Bowl.  I personally have not used any of these sites to advertise my spare bedroom.  However, I did have a friend who booked a house in Los Angeles using AirBnB when we were there for a wedding a few years ago.

With my friend’s positive experience, I may give AirBnB a whirl for a trip out to the West Coast later this summer.  I found if the right number of people is chipping into the cost of a property rental on AirBnB, the numbers work out to be cheaper than a traditional hotel room and you get the added benefit of a larger room.

 photo credit: NYCMarines

Marketwatch.com had an interesting article on tax implications from the income generated from a rental property as well as income generated from renting out rooms.  The article mentioned receiving a “healthy tax deduction” even if you generated a loss, where the rental income didn’t cover the entire yearly expenses.  This was the case with Linda, a fellow “live-in landlord.”  Though, there is a limit to how much of a deduction you can receive if you generated loss.  This makes sense because you don’t want a high income earner, stating a loss on a rental property just to receive a greater deduction on his tax liability.

Another benefit of renting out part of the house, i.e. the rooms is the ability to reduce the Alternative Minimum Tax(AMT) by moving your property tax and mortgage interest to your Schedule E, the Supplemental Income and Loss form, generally used by Landlords.

Now, this part of the article had me wondering a bit:

“The depreciation you take will be based on the lower of your tax basis or the fair market value when your start to rent out the house. Your tax basis is your purchase price plus purchase fees, cost of improvements, refinancing fees, less any deducted casualty losses.”

What happens if you’re living with your Significant Other and you’re paying him or her a fixed monthly rent?  Remember, you’re living together – you’re not married nor engaged.  Technically, the person receiving the income should report it, but I’m willing to bet that may not always be the case.  The laws on this matter will probably vary from state to state, which is why I highly recommend consulting a tax professional to prepare your tax return or at least consult them.  The advice you receive and knowing you did everything correctly is money well spent.

During the roommate search, most of us have used Craigslist to advertise our spare room.  However, one of the major downsides of using Craigslist is the e-mails we receive from scammers.

Although, the majority of us have been smart enough to look past these phony e-mails and avoid being scammed, there have been some inexperienced “live-in landlords” that have fallen victim to these e-mails.

Some of these victims commented in one of my popular posts, “Avoid Getting Scammed” asking for help.

Unfortunately, there’s nothing that I can do to help these victims, but what I can do is to prevent it from happening.  In order to do so, I’m going to need help from the community of “live-in landlords.”

STEPPING UP

I would like for any “live-in landlord” that has recently received an e-mail from a scammer to post a copy of the e-mail and more importantly the e-mail address so that the information becomes searchable through a Google search.

I can hope that by making the information available, a newbie “live-in landlord” will be smart enough to research suspicious e-mail via Google, thus tipping them off.

So will you help the community by posting e-mails from scammers?

 photo credit: Johnath

I know it’s already the second week of 2012, but it took me some time to reflect back on the past year to see what I’ve accomplished AND what I plan to do in the next year.

Let’s begin with the accomplishments.  This past year, in no particular order, I achieved the following:

• Found my tenth different roommate
• Paid back my high interest rate second mortgage in FULL
• Refinanced my primary 30-year, 6.25% mortgage to a 15-year, 4.16% home equity loan.  The reason why I did this is detailed in this post.

Let’s talk about 2012
Currently, I’m still single and my roommates are great to live with.   I don’t see my martial situation changing nor do I hear of any wind of my roommates planning to move out.  With that in mind, I can see myself continuing to rent out my spare rooms for the foreseeable future.  The rental income is just ingrained into my long term financial planning that I can’t see myself stopping.  In another words, the opportunity cost of loosing out on the rental income is just too costly.

Now, I’ve been debating with myself about efficiently using the rental income.  I’ve think I thought about it long enough that I just want to make a decision and move on.  With some major financial miles stone reach in 2011, I have two options to do with the rental income in 2012: accelerate my mortgage payments or build a more sizable savings.

The choice was kind of difficult to make because one side of me hates debt, but on the other hand, I like having the idea of a large stash to pay for unexpected expenses.

I know I can do a little bit of both, but building an emergency gives me more flexibility.  If I feel the sizable saving becomes too much, I always have the option of paying it towards the principle, but I’ll never have the option of going the other way.  So that’s my rationale and I’m not spending anymore time thinking about how I’m going to allocate the rental income.

What are your financial goals for 2012? I’d love to hear them.  Perhaps it may instill motivation in others.

 photo credit: rmhowie

###

To All Newbie “live-in landlords”

If this is your first time to the site, welcome.

If you’re looking for answers on how to start out, I’m going out with a quick start guide because this is probably the #1 question I receive.

Since the start of this blog, I’ve had numerous newbie “live-in landlords” e-mail me about various questions on renting out a room.  Some of these people I’ve kept in touch with and some well… just fell off the map.

Just out of curiosity, I took the initiative to reach out to these people that I’ve lost touch with to see how they made out.

To my disappointment, some of these people did not go through with renting out a room despite my help and success stories.

This made me wonder.

They have a spare room.   They took the time to research it on the Internet and e-mail me, but never really followed through.  I began to ponder why these people lost motivation.

Here are my thoughts in no particular order:

Not seeing results – We live in a connected society.  We send text messages and we receive text messages rather promptly, we like to see quick turnaround times.  I think this holds true with roommate advertisements.  We like to see responses to our advertisements rather than hear crickets.  I know it sucks playing the waiting game for a response, but that’s the nature of the game.

Unsure of what to do next – Once responses from potential roommates roll in, we start exchanges with them.  Then comes the seemingly awkward part of actually meeting.  Do I meet the potential roommate or just answer their questions?   So at this point, it turns out to be a stale mate.  Understandable, you’re sharing your home with a person you met on the Internet.  However, keep in mind people meet on dating sites all the time and some of them end in marriages.  You’re going to have to take the leap of faith here.

Just don’t care anymore – This just kills me.  I can’t believe people that were already willing to rent out their spare room will just give up without any serious efforts. I think part of this is just laziness, it does take some work to find a roommate, but it doesn’t’ require too much effort to be a deterrent.  What I think it may be is the lack of understanding of what financial gains these people could gain.

Not sure if this idea is as great as I originally thought – I think it’s safe to say we’ve been in this situation a million times.  You know it’s a Friday night, that one last drink sounds great at the moment, but we’re regretting the next morning.  Perhaps we get that entrepreneurial drive to earn some extra money one day, but realize a few days later it’s not such a great idea anymore for what ever reason.

I can’t possible think of any other reasons why some homeowners changed their minds about renting out their spare room.

For any newbie “live-in landlords” out there, have you faced any of these challenges?

Obviously celebrating Christmas with your roommates depends on how well you get along with them.  I don’t know how other “live-in landlords” celebrate during the holiday times with their roommates, but my current roommates are great! With that in mind, we’ve collectively decided to get a Christmas tree and do a gift exchange.

We’ve a $10-$15 dollar limit for gift exchanges.  I know this isn’t a high limit, but it does show how well we all get along.  I mean would you actually do a gift exchange with people that you really didn’t get along with or with an unsociable roommate that is occupying your spare room?

You get the picture.

In the past, there’ve been years where we just didn’t do a gift exchange and we all parted ways to our family during the Christmas holidays.  I’m writing this because this is the first year where I’m actually exchanging gifts.  We’ve planned to do the exchange on Christmas eve as I’m going to be with my family on Christmas Day.

I can certainly say that it’s a good feeling knowing we can live amicably and celebrate the holiday together.   I don’t know what will happen next year with my roommates, but I hope that these guys stick around, as I’m welcome to celebrating the holidays with them.

I’d love to hear other experiences of how other “live-in landlords” are celebrating their holidays with their roommates.

 photo credit: Keith Laverack

I wasn’t planning to get a tree this year, but one of my roommates suggested getting a tree and the other agreed.

So guess what!

This past weekend, my roommates and I took a trip to our local Christmas tree farm(Home Depot, how festive is that?) and picked up a nice 6-7 ft. Douglass Fir.

I paid for the tree outright while my other roommates bought the ornaments and lights.

I have to admit, it was a pleasant chance to spend some time with the roommates.

I haven’t shared too much of my roommate interactions on this blog because I don’t want to sound like I’m ranting over a specific personal experience or exploit my roommate’s privacy.

How are you sharing the Holiday Spirits?