If you have a spare room in your home, chances are you’ve thought of renting it out at some point or another. If so, that’s great but keep in mind that renting out a room in your house isn’t a decision you should take lightly. You need to carefully consider the advantages and disadvantages and then fully understand what it takes to make sure you have a successful rental experience. One of the most common reasons that people decide to move forward with this decision is the extra income, but there are plenty of things that can go wrong. In this article, we’ll go over the ins and outs of renting out a room in your house including the pros, cons, and tips for a successful rental experience.
Advantages of Renting Out a Room
One of the main advantages that lead people to rent out a room in their house is the extra income. The additional rent can be used to pay property taxes, contribute to your mortgage, or cover monthly expenses. It’s a great way to supplement your main source of income without expending too much ongoing effort. Depending on what you decide to offer in your written rental agreement, you may also get a little help around the house.
If you’re older and living along, renting out a room can give you some much needed peace of mind in case of an emergency. Simply having someone nearby, even if you don’t interact with them regularly, is a great advantage for those who are worried about medical emergencies or falls.
Disadvantages of Renting Out a Room
While there are a lot of advantages to renting out a room, there are also a lot of downfalls. The biggest disadvantage to renting a room in your home to a stranger is the underlying concern for your safety and wellbeing. While it’s important to use backgrounds checks, it’s hard to know what someone’s true nature is until you get to know them. You might feel uncomfortable or worry that your tenant will get into your possessions. It’s also a risk as you never know who they will have over and what they’re really like from a few interview questions.
Another thing that can be difficult is finding a tenant who you’ll get along with. Living with someone who doesn’t share the same habits as you can cause chaos and unrest in a household. If you enjoy going to bed early and you end up with a tenant who plays loud music late into the night, the extra money won’t be worth it.
Tips for a Successful Rental Experience
If you do decide to move forward with renting out a room in your house, it’s important to take some measures to ensure a successful rental experience from start to finish.
- Check Your Local Laws or HOA Rules
The first thing you need to do is check your local laws and any homeowner’s association (HOA) rules and regulations. Tenant laws vary from state to state and have certain requirements that you need to fulfill in order to legally rent out your space to someone. HOA rules also very by neighborhood and if your home is under strict HOA, you may not be entitled to rent out a room.
If becoming a renter is legal, talk to your homeowner’s insurance company about whether or not they’ll approve it. Some companies actually prohibit this and will void your insurance plan, others raise rates, while others won’t require any changes.
- Choose Which Room You’ll Rent
Even if you have an uninhabited room in your home, chances are that it’s filled with some of your things. You might be using it for your office, a workout room, or a guest bedroom, but you’ll need to make sure that any personal items are out and that you advertise the room furnishings as needed. Some people may ask that it’s emptied so they can use their own furniture, so having a self storage unit available is a great way to safely store your things.
If you’re looking to make more money, consider renting out your master bedroom. This will be more appealing to competitive tenants, especially if there’s a bathroom attached. The best option for maximum rental income is a basement that has both a bathroom and a small kitchenette.
- Properly Prepare Your Home
In addition to choosing which room to rent, you’ll need to properly prepare your home. Think of it like baby proofing, but for strangers. Consider putting deadbolts on each of the bedrooms to give you renters privacy and protect your things. Make sure that your valuables are safely secured either behind locked doors or in a secure self storage unit and go around your home to ensure that everything is fixed and working as it should.
- Determine Rent Price
Next, you’ll need to determine the right price for rent. First time renters often struggle with this, but don’t worry. There are plenty of websites you can use to get an idea of what you should charge. If you’re having trouble, try looking on Rentometer.
- Create a Strategic Advertisement
After determining the room that you’re going to rent and how much you’re going to charge, it’s time to create a strategic advertisement. There are plenty of professional services that allow you to post your listing and find potential tenants based on compatibility—take advantage of these sites. They give you the best opportunity to both advertise and interview potential renters all in one place. Make sure that you include pictures of the room and common areas along with any specific information that your renter will need to know.
- Comply with Federal and State Housing Laws
When you start to get applicants, make sure that you always comply with federal and state housing laws. The Fair Housing Act (FHA) is in place to prevent discrimination and it’s therefore illegal to deny a renter due to race, sex, mental or physical disability, religion, familial status, ethnicity, or origin. There may be other laws in place depending on what state you live in, so always do your research and make sure that you don’t put yourself in a position that can result in legal issues.
- Ask the Right Questions
While complying with laws is important, so is asking potential tenants the right questions. There are certain things you should ask and certain things you should avoid. Legally, you can’t ask applicants if they have children, but you can ask if someone will be moving in with them. Familiarize yourself with the FHA to be sure, but otherwise the following are questions that are safe to ask:
- Where are you currently living or renting?
- Why are you moving?
- What is it about the listing that’s appealing to you?
- When is your preferred move-in date?
- How long are you looking to rent?
- Where are you currently employed?
- How long have you worked there?
- What is your current income?
- Will anyone be living with you?
- Do you smoke?
- Will your current landlord give you a good reference?
- Have you ever been evicted?
- Will you be able to pass a background check and a credit check?
- Perform a Credit and Background Check
When you ask your potential tenants if they will be able to pass a credit and background check, you need to follow up on it. Don’t simply take their word for it. You’re having a stranger move into your home who agrees to pay you for the room you’re renting out so make sure that you feel comfortable and know that they are financially able to cover the costs. You can choose from different types of reports, but you need to use a Consumer Reporting Agency (CRA) as stated by the Fair Credit Reporting Act.
- Use a Written Rental Agreement
When you find an applicant that you deem a good fit, make sure that you create a written rental agreement that includes any and all of the details surrounding your living arrangement. Communicate your boundaries and make sure that your tenant understands everything before they move in. Make sure that you collect a security deposit, discuss rental fees and utilities, and don’t forget to claim the income on your taxes and deduct necessary expenses.
If you decide to rent out a room in your house, that’s great. Having the extra income is a nice way to stay on top of your mortgage and save money. If there are any items in your home that you’d rather keep private, rent out a temperature controlled self storage unit with The Lock Up Self Storage. We have a variety of different sized units for every budget, all of which are climate controlled to keep your things safe and in good condition. Our top of the line security features will give you peace of mind you need and there is always 24/7 access for our renters. To find a self storage unit near you, contact The Lock Up Self Storage. Give us a call today at 1-866-327-LOCK or find a unit online.