Hey guys, can I get your help in thinking some things through with you about renting out my house to my friend and his family while I'm away in grad school for 2 years. I leave last week of May.
Context: I'm 28 and a first time homeowner and soon-to-be landlord. Bought house in 2015 and still owe about $90k on the property, pay $4k in interest every year, $4k in property taxes, and my mortgage is $1000 sans interest, $1415 with interest. I won't have any income while I'm in grad school for three years (didactic is 2 so I'll be able to return the third year and do clinicals here). I'll be taking out loans for at least $40k while in grad school to cover what savings and such won't cover for tuition, rent, expenses, etc.
Here's my situation that I need objective eyes to help me decide whether I should look for another renter in the month and a half I have before grad school starts.
1) friend moved up the move-in date by 1 month to end of April which will make life a frantic for me and my gf. I work full time and go to school, and I'll need to add clearing, cleaning, and prepping the house faster than expected. I'll also need to get a storage unit ($100) and stay at a hotel/Airbnb $1500 due to the earlier move in.
2) He can't do the original $1300 estimate for rent and he's hoping for $1250. He pays $1400 for his rented home now cause he got a deal for a NICE house but the landlord now wants $2500 hence the move-out. My mortgage sans interest is $1000, $1415 with.
3) he thinks his landlord will keep his deposit so he says he won't be able to give me one.
4) renting to him at $1250 puts me $2000 in the red every year…but that's about as much as I'd lose if there was a 10% vacancy in my property anyway.
5) part of the original (unsigned) negotiations was that I'd tear out the carpet and install vinyl planks..that's $2000.. I was gonna use his deposit to cover the upfront costs…no deposit..I feel all the costs. So that's $2000 floor, $2000/year rental loss, $1600 for early move-out inconvenience, and any random repairs that need to happen during the year.
6) rental properties in El Paso likely will want 1st, last, security up front..that's ~$3,600 PLUS the expense of moving, school, being unemployed for 3 years.
I'm thinking of suggesting that he and his family live with his folks for the month of May so he can save up for a deposit and I'll give him the remaining week in May free so he can move in then. I think he'll be a good tenant. I've known him for 3 years. He used to live next door, is a clean freak, and is handy. I trust him. He agrees we should have a business first relationship.
What should I do? Should I go through with this as-is? Should I ask for $1300? What if he says no? Should I take on his lease sans damage deposit and only first months rent?
EDIT: bought house in 2015. House was built in 2011.