June 14, 2009

How much should I charge my kids for rent – reader question

This came in my inbox from Winston:

Hello,

How much should i charge my kids for rent?

I am not sure what criteria are important.Can you please guide me.Any info much appreciated.

Thankyou.yours truly,

Frank

Any good suggestions?

Comments (17) -- Posted by: burbed @ 6:37 am

17 Responses to “How much should I charge my kids for rent – reader question”

  1. CB Says:

    I’d give them the typical 1st month free rent promotion, but jack up the month to month on back end to make it up, if you know what I’m saying.

  2. Joe Says:

    Depends, are you looking to have this property cash-flow positive?

  3. nomadic Says:

    Do it the bay area way: charge them 50% of their take-home pay.

    But if they’re under 16 I’d let ‘em stay free for now.
    ;-)

  4. rich people rent Says:

    In the RBA, landlords charge rents equal to less than half of the carrying costs of mortgage interest and property taxes. Never-ending double-digit equity appreciation will cover the rest.

  5. sv_newbie Says:

    found this interesting analysis!

  6. Doug Says:

    Your kids can’t afford to live in the bay area. Maybe you can work out some kind
    of prefferef stock.

  7. nomadic Says:

    newbie – 90 more days of denial coming right up!

    http://www.mercurynews.com/news/ci_12585513

    California imposes 90-day foreclosure moratorium
    The Associated Press
    Posted: 06/13/2009 04:53:54 PM PDT
    Updated: 06/13/2009 04:53:55 PM PDT

    SACRAMENTO, Calif.—California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday.

    The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.

    But supporters acknowledge the California Foreclosure Prevention Act won’t stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.

    The bill passed in February is similar to the Obama administration’s Making Home Affordable Program that began in March.

    Both encourages lenders to cut interest rates or rewrite loans to affordable levels.

  8. BurbedAddict Says:

    hey guys,

    i am a barely above water owner. sometimes i wish i hadn’t bought. like today when my dishwasher kicked the bucket.

    what are the good brands today? i heard most of them are now secretly owned by china and will fall over when you breath too hard on them. i looked at costco and they have some $500 ones. i don’t want to spend more than $550. it doesn’t have to be fancy just reliable.

  9. anon Says:

    “Do it the bay area way: charge them 50% of their take-home pay.”

    Close but no cigar. Any worthless and self-centered realtor/used car salesman can tell you that the starting point for a negotiation such as this is the following question:

    “What can you pay per month?”

    Once you find out what they can pay, you find a way to have them pay it.

  10. nomadic Says:

    Don’t you mean when you find out what they can pay, you talk them into paying 10% more? Besides, this is a rental question – if it were a “buying” question, I would’ve said to charge them 75% of their take-home pay.

  11. nomadic Says:

    BurbedAddict – I’d look at KitchenAid and Bosch. :-)

  12. Bobby S Says:

    Not sure about price, depends on the location and unit. Before you allow your child to rent a room, do a credit check. If their credit score is above 700 charge no extra fee. Between 650 and 699, charge a 2% surcharge per month. 600 to 649, charge a 4% monthly surcharge. Below 600, do no rent to them unless they have paid off all collections/defaults and/or unless they have a good reason for having a score below 600 (such as credit fraud). Also if the score is below 600, charge double the rent for a deposit, plus 6 months upfront and 5% per month surcharge. Accept no co-signers.

    Do an employment check. Call and verify income by speaking to you child’s employer. Plus ask to see pay stubs for the past 6 months, bank statements, and past two years tax returns. Their gross income must be at least 3X the rent. If it is not, don’t rent the unit at all.

    Do a criminal background check. For every misdemeanor, charge a 1% per month surcharge. Accept no felonies or if your child has 3 or more misdemeanors no ifs ands or buts.

    I recommend adding coin dispensers to the washing machine and dryer and charging 2 bucks for a wash and 2 bucks to dry. Plus charge around 75 bucks a month for utilities. Set the thermostat at no higher than 68 degrees and lock it so that it is not acessible to your child. Heating costs are costly. Limit the amount that your child can cook. I advise allow no cooking on the stove or oven and just microwaving. Gas and electric bills can add up if your child cooks frequently.

    Remember, if you are in SF, you are under rent control unless if the unit was built after 1978. If built after 78, then raise rents at your hearts content.

  13. Bobby S Says:

    oh yeah, if rent is 5 days or more late, charge a 10% surcharge.

  14. SiO2 Says:

    BurbedAddict,
    I’ve had a Bosch dishwasher. did a great job, really quiet, low energy consumption. But the rack setup was somehow not suited to my dishes so didn’t load well. Perhaps I should get German dishes.
    so i’d suggest bringing a couple of dishes to the showroom to check the loading. If it works then the Bosch is well worth it.
    You might want to check out University Electric for appliances. service is very good. Prices are pretty good too. They don’t stock low end stuff but they do have some $500 dishwashers.

  15. Real Estater Says:

    I second the opinion on Bosche. Exactly as SiO2 said, it’s quiet, efficient, and does a good job. Meyer Appliance in Mountain View or Atherton Appliance has it.

  16. A. lewis Says:

    #12 – Ouch.

    #8 – my parents just replaced their 20-year old Kitchen Aid (which is a solid brand) with a fancy Miele. Not quite top of the line, but it certainly is a slick machine. Totally configurable for all kinds of different dishes each load. They especially like the silverware rack along the top 1 inch – that’s cool.

    My last rental had a nice Bosch, my current one has a Kitchen Aid which is quite good but not uber/super quiet.

    If I were paying more for a dishwasher, it’s for quietness, a food-grinder/built-in disposer thing so you can leave all kinds of food items on your dishes and not waste water rinsing them (or cleaning the filter thing), and flexibility in the racks, so you can handle different size bowls, large pots and pans, or 20 wineglasses when you have people over.

  17. SB123 Says:

    As a renter, my .02 cents would be to let them live in your property for free! After all, they may have student loans to pay off, a car loan to pay off and other bills such as medical and dental insurance.

    It would be good to cut them some slack and allow them to work their way out of debt – if they have any.

    If she or he is debt-free, and you need the money, then consider $100 – $200/mo rent with a signed rental agreement.


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