Hello! Enjoy this blog post from a blog friend of mine. As you know, I'm all about having roommates in order to lower your expenses. Here's what Adam has learned from having roommates.
I've always had roommates.
Since the day I got to college, I've been splitting rooms, apartments and houses with a long parade of strangers (college just puts you with somebody), friends, fraternity brothers, and acquaintances. Some of them have worked out great. They were phenomenal roommates and have become lifelong friends. Others were complete disasters, even if they were nice people.
Personalities can clash, ideas about cleanliness can vary significantly, and other issues that never occurred to you can pop up.
When I graduated college and started my career, I really didn't have to have a roommate. I was living in a low cost part of the country, making a solid salary, and could have easily afforded a 1 bedroom apartment or even a house with a bit of savings.
Instead, I just kept the streak alive. My first apartment was a 2-bedroom, 1 bath, in an older complex. It wasn't fancy, but it was 5 minutes from work, in a decent neighborhood, and only cost $600 a month (that is not a typo). I didn't know anyone in my new city, so I started out living solo, but as I made friends, I found another guy looking for a place to live. Once we hit it off, he moved in and my bills instantly dropped by half. For the next year, I spent $300 on rent and maybe another $150 on utilities and internet.
Over the next 3 years I didn't have another steady roommate, however, I did have interns live with me each summer, paying $600 a month, covering my entire rent for 3 months. This was essentially the same as having a roommate 6 months a year. Interns can be a great trial run for having roommates since they are usually there less than 12 weeks with a nice, fixed move out date.
Once I moved from my super low cost city to Houston, I initially split a place with a friend and after buying a house, I've had 2 roommates. Unfortunately, most of my friends make similar money to myself, so I could not find a friend to move in. So we (my girlfriend and I), decided to get aggressive and turned to my favorite furniture spot – Craigslist.
We’ve actually had to incredibly good experiences thus far. Our first roommate lived with us for a year and has become a good friend. The second roommate still lives with us. She’s fun, quiet, and respectful of the house and our space. After keeping the streak alive for 10 years, I think I’ve learned a few things.
1. Roommates are the single easiest way for a BIG WIN.
I’m a big believer in big wins. They have a major impact on your finances and often can be left to run on autopilot once they’re set up. The downside is they can be tough.
It’s easy to say max your IRA / 401k, but you don’t always have the money. It’s easy to say go to college debt free, but on a practical level it can be tough.
Your living expenses (rent, mortgage, utilities, etc) is likely your single largest expense, and it’s the single easiest to cut with a roommate. It’s a BIG BIG WIN. If you're simply willing to share your space, your rent instantly cuts in half and if you own your place, you may be able to even live for free. Getting that roommate can also help forgive a lot of small personal finance sins, like keeping the cable or your latte habit because your more than making up for it with that monthly check.
2. It’s tax free.
If your splitting an apartment you are deducting you may be deducting your expenses by 50%, but if you think about how much extra cash you would have to earn to cover those costs, it’s well more than 50%. An extra $600 in rent is more like a $1,000 pre-tax.
If you own your place, I won’t give tax advice, but how you report your roommates contribution, I’ll leave up to you.
3. Upfront Rules are Crucial.
With every roommate I’ve had, particularly once it was in my home (not a rental), I’ve found a new ground rule I should have laid out before they moved in. If you want a smooth relationship with someone it’s crucial to discuss everything up front and make clear every single expectation.
The number one things I’ve found are cleanliness (in painful detail, particularly shared spaces and the kitchen), pets (no and no and no), noise, guests, the thermostat, and any potential shared groceries or items such as kitchen gear. Another one many young people should cover is internet rules, particularly around downloading. You don’t want to get busted by Comcast or the government for ripping the newest season of Game of Thrones and you didn’t even know it was happening.
Finally, put it in writing. Not as a contract to sign. Just on paper so that there’s no confusion or accusations later about what were the rules.
4. There are Fringe Benefits.
Having a quality roommate is like having an automatic house sitter and dog watcher. We like to travel and unfortunately have zero family anywhere in Texas. The amount of money we’ve saved by having roommates that are happy to watch our dogs for a weekend or a week is HUGE. I felt much better about our 10 days in Brazil knowing someone was home with the dogs.
Not to mention the peace of mind, knowing someone you trust is watching your animals and they’re staying in their own house, backyard, and there weren’t any major upheavals like there would be if you stuck them in a kennel for a week. This has been the biggest benefit that never occurred to me.
5. Craigslist Can Work (it’s not scary).
Depending on what part of the country you live in, finding a place to live or roommates on Craigslist is either completely normal or considered a way to meet a serial killer. I find that people on the coasts (NYC, San Fran, LA) tend to be really comfortable on CL, while the Midwest and South find it a bit scary. Here’s how we find our roommates:
Create detailed description of your home (no address), the space for rent, your lifestyle and expectations. We include our age range, our drinking and socializing habits, our work hours, and our expectations on all those issues. It’s also worth noting no smoking or drugs. We also usually include a photo of the house and the room (which is fully furnished).
Ask for a Facebook and Linkedin profile. This is the crucial step I’ve found. You may not meet a person you click with, but if they have a super normal facebook, with friends, events, and family, they’re probably not a serial killer. Linkedin helps ensure that they have a quality, paying job and a solid job history, and shouldn’t have an issues paying the rent.
If you are really worried about it you can also background check who you are dealing with. We’ve never actually taken this step.
Most emails can go in the trash immediately. We’ve found that if we get 50 emails, less than 10 are worth responding to, 5 we have a phone call with an invite to see the place, and there’s usually a clear 1-2 that we click with and think would be a good fit.
Only choose people you can see yourself hanging out with. This isn’t a tenant in a rental house. You’ll be sharing your kitchen, watching tv together, and likely meeting their friends and sharing experiences.
Conclusion
Roommates have been a primary part of my personal finance strategy of focusing on Big Wins have allowed me to save tens of thousands over the past decade that would otherwise have gone to living expenses. We’ve also made great friends, learned about other cultures, and enjoyed a lot of great conversations. While the roommate situation will probably stop once we have kids, it’s a great strategy for the 20-something crowd.
Author bio: Adam Chudy is a writer, analyst and investor living in Houston, Texas. For more on personal finance, investing, travel, gardening, personal improvement, and living a better life, check out the blog at AdamChudy.com and on Twitter @AdamChudy.
Are you interested in having roommates? Why or why not?
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Chris @ Flipping a Dollar says
August 14, 2015 at 4:58 amHah! My wife is roommate enough now.
We did have roommates all throughout college, and then we kept the one guy after college for a year too. Then it was the freedom of having only my wife. There’s something to be said for walking around without pants on. I don’t think it’s worth a couple of hundred dollars you can get back from a roommate, but it’s definitely liberating!
Adam says
August 14, 2015 at 7:50 amIt’s not for everybody Chris, but currently we do much better than a few hundred dollars. We’ve reduced our mortgage costs (mortgage, insurance & taxes) by 77%. I think for those either struggling to save or who are trying to be extremely aggressive, it’s one of the easiest win possible if your still childless.
Chris @ Flipping A Dollar says
August 14, 2015 at 7:57 amHoly crap! That’s amazing! I didn’t realize it’s that much. You’re going to be able to save a TON of money. Didn’t realize the magnitude was that big!
Adam says
August 14, 2015 at 8:04 amIt’s definitely made a huge difference for us the past 3 years (and that’s ignoring what I’d have to make pre-tax) which I’ll leave to everyone to decide how to deal with.
Crystal says
August 14, 2015 at 10:16 amAs for walking around without pants…as long as there are boxers/underwear for men, tshirts and underwear for women, etc, our household can still be pants-less. We’re all adults and friends – two couples and one gay guy. And we’re all in our own home. But only me and that gay guy can be found wandering around like that occasionally (usually for snack runs from whatever room we were in to the kitchen)…everyone else prefers pants or pajama bottoms since we all do have pets and hair is all over the place…we prefer to be free! 😉 I mean, yeah, we’re not nudists, but bodies are just bodies, right?
Michelle Schroeder-Gardner says
August 14, 2015 at 12:34 pmHaha this is how we are as well. It’s just my sister (she’s our roommate), so I don’t care what I wear.
Kayla @ Femme Frugality says
August 14, 2015 at 7:22 amI had roommates for 1 year in college and since then I’ve always lived by myself. I love living by myself, but my mortgage is pretty expensive, so I’ve been thinking about scouring Craigslist to find a roommate to rent out my basement. We’ll see if I get up the nerve to do so.
Adam says
August 14, 2015 at 7:51 amIf your house is well setup for separate living spaces I think its a great option. You should give it a shot! If you list it and nobody you feel good about replies, just don’t move forward. No harm, no foul.
Beks says
August 14, 2015 at 7:24 amMy roommate experiences have all been horrible, so I never want to do it again. I would live in my car before I lived with another person who isn’t a relative or spouse (I’ve tried the close friend thing. We’re not friends anymore).
Adam says
August 14, 2015 at 7:53 amI actually think your often better off finding someone your not close friends with in case it doesn’t work out well. While you may match on a friend level, there’s a lot of personal habits that matter a lot more when you live in close quarters.
It’s not for everybody, but it’s one of the easiest BIG WINS depending on your situation.
Mary Austin says
September 28, 2016 at 10:54 pmAirbnb?
Steve Miller says
August 14, 2015 at 7:32 amI kept a roommate for about 5 years after I graduated college and my last roommate became my wife. By the way, she’s still my roommate 🙂
Adam says
August 14, 2015 at 7:53 amNow that’s a perk I didn’t mention!
Michelle Schroeder-Gardner says
August 14, 2015 at 12:35 pmThat’s awesome Steve!
Ali @ Anything You Want says
August 14, 2015 at 8:19 amAlthough it is not what I set out to do, I have had roommates for my entire post-high school life. I went from living with my parents, to living in a dorm, to living in apartments with roommates, to now living with my boyfriend. Although I love the idea of living alone, I’ve just never been able to stomach the price tag. I agree that it is the single easiest and quickest way to reduce overall living expenses. I have also had good luck finding roommates on Craigslist. As long as you screen well and are up front about lifestyles, it has always worked out well for me.
Adam says
August 14, 2015 at 8:37 amWe’ve kept going with it just since it’s gone so well. It wasn’t a plan. Sometimes I wish we lived alone, but a lot of the time it can be fun to have somebody around, and it’s been huge for travel with our dogs.
I think lifestyle is huge. We’re super clear on what we’re looking for. Non-smokers, no kids, no drugs. We drink socially. People with normal 8-5ish hours. I emphasize cleanliness in shared areas, particularly the kitchen and noise volume.
Mr. Utopia @ Personal Finance Utopia says
August 14, 2015 at 9:24 amOnce you get married, your spouse becomes your roommate and there are Fringe Benefits there too – hopefully! 😉
That’s an impressive streak of roommates. You must have saved a colossal amount over the years.
Adam says
August 14, 2015 at 9:52 amI’ve saved somewhere between 50-90% of rent or mortgage in that time period. It’s been a huge win for us.
Mrs. Crackin' the Whip says
August 14, 2015 at 9:35 amI have never had a roommate but I’m fascinated by the idea of it financially! I relate more to Chris at Flipping a Dollar though. My family are enough roommates =) Growing up, I actually used to worry about sharing a dorm room with a roommate. Can you tell I’m an only child?!
Adam says
August 14, 2015 at 9:51 amI was too. I actually think that’s part of why I enjoyed it. I never had siblings to hang around with and enjoyed the roommate experience from that standpoint.
If we had kids, we certainly wouldn’t be doing this anymore, but it works great as DINKS. The only issue I usually ever have, is I’m a bit OCD about some of the cleanliness, and not everybody is quite as bothered by that as I am.
Crystal says
August 14, 2015 at 9:52 amMy husband and I are 32 years old, have been married for 10 years, live in Houston, TX, and are on the roommate train with you. In college, from 2001-2004, it was assigned roommates in the dorms and on-campus apartments, which was a crap shoot on a good or bad roommate – we had both over those 4 years.
From graduating in mid-2005 through April 2007, we had cheap one bedroom apartments ($399 and $730 one year each), then we bought our first house.
From 2007-2012, we had 5 different roommates on and off for a total of 2 years (three friend group acquaintances and two from Craigslist). That was $500-$600 a month when our house only cost us about $1000 a month with our mortgage, property taxes, etc.
In October 2012, we bought our new home (5 bedrooms, 4 baths, 3750 sq ft) and our friends moved in with us from our old house. We also rented out our old house and paid it off by March 2013. That brought our total mortgage, prop taxes, etc to about $2100 and our rental income to $1800 until January 2015.
Then our other friend moved in to our new house too in Jan 2015. Now our total home expenses are around $2200 a month thanks to rising property tax values, but our rental income is about $2400. We get taxed on it all, but it is still amazing to me to pretty much pay $0 for home costs, own one home outright, and only have $197,000 left on the other McMansion mortgage. Yay for Houston, TX home costs!
And all of your points about rules up front, free pet help (and for them too…our roommates have a dog in one room and a cat in the other and helped with our two dogs until they passed away last year and now our cat), and Craigslist not being awful are all true. There are obviously crappy roommates on Craigslist too, but if you do background checks, follow your gut, give them the rules up front, and get the deposits and two months rent up front (first and last), it goes smoothly. 🙂
Overall, roommates have definitely helped us along the way. We’ve brought in about $35,000 just from roommates in our own home over the last 10 years…
Adam says
August 14, 2015 at 11:21 amThanks for the story. Those numbers are specific and pretty amazing. You’ve basically got 2 houses for free (minus a downpayment). Shows what you can do over time if you don’t mind sharing space.
Michelle Schroeder-Gardner says
August 14, 2015 at 12:37 pmLove the free pet help!
Cece says
August 14, 2015 at 11:06 amI was never in a position where I sought out a roommate (outside of a significant other), but definitely see how it can have a huge money saving benefit. I’d say it has to be the right roommate and there has to be enough space! Living with people can be tricky.
Elizabeth Colegrove says
August 14, 2015 at 12:06 pmRoommates were very financially beneficial for us. Roommates allowed us to pay cash for my masters degree, saving up a considerable savings account, pay for our first rental, etc. If you are willing to handle the different personalities it can be an amazing “sweat equity” to put more money into your pocket. While we have grown out of the roommate stage, we are actually looking at buying a house that has a mother in law suite, multi-plex, houses with another source to generate money. Living for free or greatly reduced costs, is a great way to get ahead. The biggest thing we learned (the hard way of course !) was to have a roommate contract (or in our case lease) and put everything in writing. It kept it professional and prevent misunderstandings.
Adam says
August 14, 2015 at 1:24 pmThat’s not a bad tactic, though we’ve always been less formal than that. We haven’t had any official leases, just month to month.
Congrats on the real estate. I hope to do the same in the near future.
Hannah says
August 14, 2015 at 2:11 pmRoommates are a huge win. Even with a toddler, we’re happy to have a roommate because we’re living completely expense free. His rent covers our utilities, taxes, and insurance, with a little extra besides. If we weren’t renovating the place, our housing costs would be effectively zero.
Adam says
August 14, 2015 at 4:47 pmThat’s great Hannah. Your the first person I know of doing it with kids, if it’s not a family member. I’d love to hear more.
Jason Butler says
August 14, 2015 at 6:46 pmI haven’t had a roommate in nearly 3 years. My next roommate will probably be my wife whenever I get married. My last 2 roommate experiences were horrible. I vowed not to do that again.
Fervent Finance says
August 14, 2015 at 9:24 pmI’ve had roommates basically my whole life. Lived with parents until college. Then college roommates. Then roommates while I’ve been in the working world. I’m 27 now and definitely been craving my own space lately, which I’ve never had. Next year I definitely think I’m going to make the move to get my own place, which means I’m probably moving out of NYC since I’m too frugal to pay NYC rents alone.
But right now roommates are great for the wallet. I live in a 2 bedroom converted into a 3 bedroom with two friends. My rent is less than anyone I know, and our place isn’t half bad. Plus it’s in Manhattan, not another borough AND I walk to work in about 12 minutes. But eventually enough is enough and I definitely want my own place. Hopefully I can finagle a flexible work from home schedule with my employer 🙂
Jayson @ Monster Piggy Bank says
August 15, 2015 at 6:09 pmI am a college student and have two roommates. It’s not only fun to have roommates but also frugal, making the expenses lower. And, aside from this, I think one benefit is that I have someone to depend on in case I need help with my homework and I get to socialize and to learn something from them and their experiences.
Brittney @ Life On A Discount says
August 16, 2015 at 8:39 pmGreat topic! I have gone back and forth on the roommate situation. Over the past ten years, we had roommates for about 8 of them. My brother lived with us, a good friend lived with us and my sister lived with us. When we got married, we actually decided to not have roommates because we wanted to enjoy just us for a while. We did that for about 2 years. Just recently (like last week) we actually allowed my husband’s brother to move in with us. He just moved back to town and needed to find a place fast. What’s nice is that he works 11pm-7am and then sleeps during the day. So we rarely see him and we get an extra $300 a month for his rent. So far, so good. We don’t plan on having children for another 1 1/2 to 2 years, so we will likely let him stay as long as he likes up until that point.
Tyler says
August 20, 2015 at 2:46 pmNice article, Adam! I had never thought to use Craigslist as a resource for finding a roommate. Great idea! I think that finding someone you don’t know to live with is often better than living with a friend. But doing a small background check on LinkedIn or Facebook – as you mention – is a smart way to go about it.
DNN says
January 25, 2019 at 4:34 pmI learned that lesson the hard way back in the day in South Florida and I’ll never let anyone live with me ever again that’s not family.