I've thought about this a lot actually. Only thing that makes sense to me is a payout for their portion after you sell. It would have to be some kind of agreement without paper though to avoid getting taken to court or something idk.

You could do some sort of partial equity deal, but realistically just splitting interest and utilities is what I think makes sense. If you're going to be the person that lives in the house long term, then your roommate shouldn't be paying principal.

Here's what I did. I own a house and have a spare room. I have a friend who needed a place to stay and I didn't put a price on rent. Just pay what you can. Some months he gave me a 100, sometimes 200, sometimes (and often) nothing but he would cook the house dinner and we'd drink and have fun.

Yeah, I know, not apples to apples. But I never felt dirty and it helped him get on his feet.

I've thought about how one might theoretically do this myself, though I've never been a landlord.

Best idea I was able to come up with was that you set up some LLC whose sole asset is the deed to the house and/or land, with yourself (initially) as the owner of all shares in the LLC. "Rent" is then the purchase of shares in the LLC from you to the tenant(s). Share price is tough to figure out, but I think what you would do is have X number of shares where X = (purchase price of house (i.e. downpayment + initial mortgage value)/total rent being charged). Other costs like property tax, insurance, or maintenance would be paid by all "investors" in the LLC proportional to their fractional ownership, which would be recalculated after every share purchase. Things like utilities would be supplemental to the purchase price of the share as they make more sense to split evenly rather than by share.

What I've described is kind of similar to a tenancy-in-common, but in that case both owners have usually gone in together on a purchase.

What this gives you basically is that you would still have full control of the LLC (and therefore the house) until you'd sold 50%+1 shares. What this gives the tenant is partial ownership. Upon moving out they could either sell all their shares back (presumably to you), or start selling their shares to a new tenant, or keep the shares and receive a proportional return when the property is sold.

It's way more complicated, but more equitable.

The only exception to landlordism in my opinion is elderly and disabled people renting out rooms in their homes so they can live. Most people would probably be fine with helping out the elderly or disabled as long as the person they're helping is giving them a fair rent and treats them fairly.

You only really become a Landlord when you're renting out property that isn't your primary residence for profit.

Don't worry about dealing with some complex equity system, you can just remain in contact with previous tenants and maybe give them a bit of scratch when you sell the home of that makes you feel better. Otherwise just keep your rental price below market and you're doing them a favor while they do you a favor.

sharing a house with someone is the lowest form of landlordism. many people don't really WANT to do it, but they have to.

i lived with a very close friend in his house for like 4 years. We had an apartment before the house. He literally only charged me half the mortgage and didnt fleece me or anything. I knew what the mortgage was too. He didnt make me sign a lease either cause we trust each other and have known each other since elementary school.

You could take the mortgage and charge them per square foot since the rooms are different sizes. My friends house had 4 "bedrooms" but 1 of them was hilariously small and another wasnt much bigger than that.

So in the end, i only paid like $300-$400 a month which is a great deal and honestly i didnt care about any sort of equity deal, even though both of us are leftists. The house rent was cheaper than our apartment was too. I honestly wouldnt worry about an equity deal if youre charging them less than half the mortgage, and i especially wouldnt worry about it if they are a close friend. Doing some kind of equity deal, especially with strangers, is too complicated to worry about. And most people won't give a fuck if the rent is dirt cheap.

A lot of this depends on your financial situation and whether you have the house paid off too, and how much you trust the people living in your house. If the house is paid off, or you can pay most of the mortgage yourself you could set some of the money aside and do a reverse deposit when they move out aka give them some of the money back when they leave. That would look even more awesome if you didnt charge a deposit in the first place.

also if it was a rich uncle i would think that maybe the house is paid off?

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a mortgage payment is something like 33% principle, 33% interest, and 33% taxes+insurance

realistically, it's possible that less than half of a mortgage payment goes to actual equity. splitting the non-equity building portion + utilities with a tenant could be realistic. a longer term residence could involve some more complex "buy-in" with sweat/payment to split any appreciation.

Silly idea... but the least amount of paperwork dealing with bureaucracy. Feels super risky

Pulling numbers outta my ass here... so ... yeah.

2k a month in mortgage (I'm going to assume this has the home owner's insurance included... because that is what my mortgage company did) with a 1~2k bill, once a year, for property taxes.

2k *12 = 24000

24000+2000= 26000 in mortgage and property tax a year.

Lets say, there's lots of people willing to try to rent your three other rooms. An even split would be..

26000/4 = 6500 per person, per year

6500/12 = 541.67 per person, per month to pay for the home owners insurance, mortgage, property taxes. (never had renter's insurance but I'd imagine that you'd probably want to look into that and this would change the numbers in an upward way...)

So, what would happen if everybody, all four of you, paid 600 a month in rent?

600*12=7200 a year @ 600/mo

7200-6500 = 700 extra per year

700*4 = 2800 extra per year from all housemates.

So... maybe you'd be able to work something out where you'd save this 2800 every year, in some interest bearing account... probably a 30 day CD or something until you get a larger amount than 5000 (then you'd break it into two chunks, one chunk that stays in short duration CD's and the rest in a 12 month CD).

You'd bee keeping meticulous accounting of who paid how much during what time periods so when they left, you'd work out a repayment plan where you'd slowly pay them back from that pool of money generated from the extra 2800 a year until you'd paid them back what they paid you. As new renters moved in, they'd be adding to the slush fund to pay back previous tenants.

Like I said, its a bit risky and requires lots of coordination and everybody keeping in contact with each other. This possibly would work better in situations where you can get stable renters who stick around for 5+ years.

But handshake agreements could be made that, when/if a renter can't make their rent for the month, their portion of the slush fund could be used to cover their portion of the current month's rent. This amount could be deducted from your obligation to them if/when they move out. If they were flush with cash they could pay more into the slush fund ... but ... I dunno why somebody would want to bother with it. If the money is kept in your name, they wouldn't be expected to pay taxes on it until they started getting their payback from you (assuming you can't just give them their money in cash).

Alternatively... and a bit more... dirty...

Depending on what the actual mortgage per month, insurances, property taxes, utilities are AND if your source of income were reliably stable... you could try to pay the lion's share of the mortgage's principal (or overpay when possible) and the other housemates' rent goes towards the lion's share of the mortgage interest, insurances, property tax bill. You can still do the payback routine listed above but you just work on reimbursing the housemates for their contribution to the equity of the house and not the other bills (interest, insurance, property tax). They'd get less back but if would mean that, when they left, you wouldn't be expected to pay them back as much per person as in the above example.

Or if you're income allows you to pay the mortgage and property tax in full, the other housemates' rent is to cover utilities and maintenance. Technically, you'd have an argument for still having full equity in the house. Then its either, no payback scheme for housemates that leave or a (hopefully) smaller duty to slowly pay them back for all the utilities/maintenance that they fronted you the money for during their stay at the house.

Best case scenario: You get a crew of super awesome folks who vibe with everybody else and are your housemates for 10+ years. You start out doing the first scenario but every year have a big sit down and plan for next year, decide if things are going well enough that everybody or just some people can pay more per month with that extra going to pay down the principle, which will reduce the overall mortgage interest cost. Paying off the mortgage sooner, rather than later (even with penalties) means you actually have some ability to change your homeowner's policy to a more favorable rate, which reduces that bill. So now, you all can decide if you want to keep paying rent at the current rate that will mostly go into a communal slush fund or reduce the "rent" to just property tax and the insurance. Or you pay more into the kitty while everybody else pays less so that if/when a housemate leaves you have a fund to begin the payback process. This is all assuming that you all don't get to a point when you agree to sell the place and split the proceeds between the housemates as their payback.

There's LLC's and Co-ops and stuff, but its probably lots more paperwork and tax accounting stuff.

Oh, I forgot to mention that you could have your payback scheme broken down between two time frames. I shopped at a grocery coop that would break down a customer's yearly patronage into two piles of money. One pile of money would get paid back at the end of the year as a patronage refund for the current year and the other pile would be held back for ... some ... amount of years (i forget how long) before being returned as a patronage refund. You could do the same if you can keep your books straight enough, and the renters don't disappear off the face of the earth for long periods of time. Makes their income tax burden potentially less and reduces how much you'd be expected to payback during any month.

You could get married, then you would jointly own the house. Not a very realistic solution, everyone else has given much more practical advice.

i say just charge people what itd cost to clean / fix the room up for when they leave, plus utilities that they use. if they make a mess in the common area, then charge them for the cleaning of it. no rent, but they could spread out the payments and you just hold on to the cash in some way. if they break anything, then talk payment plans again.

the fact is, you are gaining equity from buying a house, since the system treats it as a commodity. whats messed up is charging people and paying it into equity, they see no improvements themselves and do not gain equity. charging them to fix things that they use that break is reasonable.

I live on an animal sanctuary. Nearly all of the rent money goes to animal welfare / rights. Either charge minimal rent, or charge the market rate, and do something good with the money. You as an individual are in no way obligated to be the one true communist living at odds inside a capitalist system.