5 Financial Conversations To Have With a Potential Roommate
Almost everyone has a roommate horror story. Perhaps you lived with someone who habitually ate your leftovers. Or would loudly argue with their significant other at all hours. Maybe they were always broke, leaving you to scramble for their share of the rent every month.
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It’s not always easy to tell what annoying habits a potential roomie may have. But it is possible to weed out roommates who may cause money troubles. “When evaluating prospective roommates, you should ensure that their personality and lifestyle won’t clash with yours…but you should also have some candid conversations about money,” said Leslie Tayne, a financial attorney and author of “Life and Debt.” “These early chats should take place before anyone signs anything. Otherwise, you could get locked into a living arrangement that’s anything but harmonious — and might even get litigious.”
So before you move in with anyone, here are five financial conversations to have first.
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Have you ever struggled to pay the rent on time?
Making sure your rent is paid on time is crucial. You need to feel confident that your roommate can be trusted to keep up their end of the deal. “Remember that you will be on the hook for missed payments also if you are on the lease,” said Andrew Latham, a certified personal finance counselor and the managing editor of SuperMoney.com.
Missing rent payments could not only land you in hot water with your landlord, but your finances could suffer, too. “Missed payments can trigger expensive late fees and negative items on your credit report,” Latham said. For example, it’s typical for landlords to charge late fees of 5% to 10%. And missing rent payments by 30 days or more can result in a serious hit to your credit that will take a few years to repair.
That’s why it’s a good idea to talk with your potential roommate and find out if they’ve ever struggled to pay rent on time. “If they have, you may want to look for another roommate or make special arrangements, such as having an extra month of rent stashed away or collecting their share weekly instead of monthly to help them budget,” Latham recommended.
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What’s your income source?
Maybe your future roomie has been reliable in the past, but you also want to be sure they have a stable income to support shared bills now and in the future. Lyle David Solomon, principal attorney at Oak View Law Group, said you should have a conversation about your income sources before signing a lease.
Some talking points: How stable are your jobs and what is the backup plan if someone loses theirs? Does your potential roommate jump from one job to the next, or work under the table (which could disqualify them from collecting unemployment benefits)? Shaky employment history is a red flag and could cause problems down the road.
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How will we split expenses?
When you rent an apartment, there are a lot more shared living expenses beyond the rent. You also need to pay for utilities, internet, groceries and maybe even a shared Netflix account. So it’s crucial to clearly define who is responsible for paying what and when those payments are due, according to Tayne. To avoid any misunderstandings, it may be helpful to create a document that spells everything out. “As you review this information with the other person, take note of their reaction,” she said. “Do they seem receptive to your ideas, or are they at least willing to negotiate or collaborate? If not, that’s a sign that the deal probably won’t work.”
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How will the bills actually get paid?
Once you have your shared expenses nailed down, it’s important to decide how and when those bills will actually get paid. “Make sure that you discuss who will be paying the landlord each month, how the money will be getting to the landlord, and when the other roommate should give their portion of the rent to the designated payer,” said Jacob Dayan, CEO and co-founder of Finance Pal. Try to put together a plan that works around both of your schedules and budgets.
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Who pays for damages?
Accidents happen. And usually, they get paid out of the security deposit. Or if they’re expensive enough, you may have to pay out of pocket for the repairs. It’s important to discuss whose pocket they come out of — before moving in together, said Shawn Breyer, owner of The Hive Law.
For example, if only one of the roommates is responsible for the damages, are they paying for it fully, or are you splitting those costs at the end of the lease? “Not having an agreement with your roommate can cost you thousands of dollars when you didn’t do any damage to the property,” Breyer said. “Most security deposits get reused for the next lease, so if you lose your security deposit, you will have to come out-of-pocket for the security deposit at the next place that you live.”
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Last updated: Sept. 15, 2021
This article originally appeared on GOBankingRates.com: 5 Financial Conversations To Have With a Potential Roommate
