Our University of Toronto student daughter will be renting a part of a house for $2,450 a month with three friends in Harbord Village. She’s sharing the larger bedroom with one of her room mates. The other girls have private spaces - an attic loft space and an average-sized bedroom. What do you suggest as a reasonable break down of the rent? We are not in Toronto and are not savvy to this rental market nor to the whole room mate situation.
It’s not difficult to determine roommate rent breakdowns if you do some math and all involved agree with your calculations, though the eclectic layout of homes that makes up much of the student housing in the downtown core means you will be working that tape measure. I’d also like to discuss the option of owning the housing your university children live - but more on that later.
The common practice for figuring out how the rent splits is to calculate the percentage of space each tenant occupies. Measure the bedrooms and eliminate the common areas, such as kitchens, bathrooms, hallways and other common living areas, when calculating your percentages.
In your situation, it sounds as though there are three bedrooms. Start by measuring each of the rooms, and calculate the total space for all of the rooms. Then take each room’s square footage and divide it by the total area of all the rooms. For example, if the total area of all bedrooms is 800 square feet then your breakdown might look like this:
Bedroom #1: 300 sq. ft. would be 37.5 per cent of total bedroom space (i.e. 300/800=0.375)
Bedroom #2: 250 sq. ft. would be 31.25 per cent of total bedroom space
Bedroom #3: 250 sq. ft. would be 31.25 per cent of total bedroom space
With these percentages on hand, you can now easily calculate each of the roommates share to come up with a fair rent scheme. For example, bedroom #1 in the above example would be $918.75 (i.e. $2,475 x 0.375). With your daughter sharing the larger room, she and her roommate would each pay $459.37 a month (they’ll have to work out the extra penny between them!).
That takes care of the actual rent proportions. As each of the roommates will be using the utilities fairly equally, it’s easy enough to simply split the utility bills four ways.
Now, let’s look at what might happen if you actually owned the property.
There are maintenance costs and risks associated with owning any property, and that reality is compounded with a rental property. This is the most challenging income property of all – one located near an educational institution serving the student market .
First off, there’s a lot of turnover among student tenants. The best you can hope for is that a student will remain in a property for the tenure of their university education - typically four years. But that’s unlikely given the nature of students, from roommate disagreements to their general desire for variety and change. This means that you will have to spend time and money in order to find suitable tenants every year or so.
Also, students like to party, and this means your home will endure higher-than-average wear and tear. From fixing holes in the walls to doing a whole new paint job, you will undoubtedly be working to get your unit(s) back in shape when it’s time to re-rent.
Here’s one solution: A colleague of mine acquired a house near a major Ontario university with room for several students. His primary tenant?: His engineering student daughter. Her job is to select tenants she knows and trusts and ensure that the house is kept in good shape. She’s done a great job finding students within her faculty, most of whom have stayed for the full-year term. All of them plan to be back in September.
In return, she gets free rent and the satisfaction of keeping a family investment in great shape. When the tenant has a stake in the house, it works. It’s an approach that many readers with children nearing university age might consider.
Ricky Chadha is a broker with Royal LePage Estate Realty in Toronto, and specializes in applying social media and other digital tools to the business of real estate. You can find Ricky on Twitter @your416 or at his website RickyChadha.com.
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