These are the things that you need to do if you’re planning on renting out a room in your house.
Despite the amount of responsibility that a person has to take on, being a landlord is financially rewarding; after all, who doesn’t need a bit of extra income these days? While not everyone can afford to invest in an entire property, that doesn’t mean that they can’t take advantage of this lucrative business. Their next-best option? Renting out a room in the house.
Here are some steps you need to take when you decide to house a renter right where you live.
1. Handle the legal aspects first. Renting can be a great set-up for both the landlord and the tenant, but only if you do it right. Find out if your city or community has specific laws regarding renting out one of the bedrooms in your house, and be sure to abide by them.
2. Research on rent rates. Remember that rates will vary depending on factors like property size and location, so be careful not to price your property too high or too low. Scout your area for other properties that are renting out rooms and find out how much they’re charging so you’ll have a basis for your own rental’s rate.
3. Get insurance. If you already have home insurance, contact your provider and find out if getting a tenant will affect your coverage in any way. You should also require a tenant to get renters insurance to cover his own property, and also to take care of any damage that he might cause while living under your roof.
4. Take a good look at your home. Identify which room you plan on renting out and see if it will be adequate for a tenant. Because rooms that are bigger and have their own bathrooms can be rented out for more money, you might want to consider moving to a smaller room and renting out the master bedroom. You should also think about renting out the basement if it’s sizeable enough, pristine and has its own bathroom.
5. Meet potential tenants face-to-face. When people come to see the room, make sure that you’re the one doing the interviewing. Keep in mind that you’re basically inviting a stranger into your home, so it’s necessary that you do what it takes to find out everything about the person. Ask for documents like proof of employment, student information (if the tenant’s still in school), references from past landlords and their credit record. It won’t be a bad idea to trust your gut, either; if something doesn’t feel right, don’t be afraid to turn them down.
6. Lay down the rules. Once you’ve selected a tenant, be sure to create a contract that contains everything that you’ll normally find in a lease agreement, such as how much rent is and if utilities are included, late-rent fees and your policy about pets. Beyond that, the contract should also contain your rules that address your particular living situation, like which areas of you home are common and which are off-limits, and your policies on having guests over.
Being a landlord of a room in your home is a lot trickier than being one of an entire house for rent. However, as long as you take certain precautions, there’s no reason why this arrangement shouldn’t work out for both of you.
Jillian Cariola, Writer
(cover image by Robert Linder)