Aside from potentially resulting in new friendships, renting out a spare room in your house or apartment is a great way to generate additional income.
If you are looking for ways to help cover your mortgage payments, want to pay your mortgage down faster, or have other needs for it, finding someone to rent a room in your house can certainly help you achieve these goals.
Renting out a room can even pave the way towards purchasing a home in the first place.
For example, if you are tired of paying rent and would like to own a home, but want to upgrade while covering some of your new expenses including mortgage and taxes, purchasing a home with the goal of renting out a room could work for you.
Doing so could result in paying the same or even less than you currently do in rent while building equity in a newly purchased home.
There are millions of people who share housing in America, as it’s a great way to live comfortably and affordably. If you are thinking about renting out a room in your house, there are some steps to take first.
What to Do Prior to Renting Out a Room in Your House
Here are some steps you can take to ensure that your room-renting operation is a long-term success.
Determine Which Room(s) to Rent
If you only have one extra room, this exercise isn’t needed. However, if you have more than one extra room, consider how many rooms you would like to rent.
The balance here is obvious, the more rooms you rent the greater the additional income, but also greater is the risk of getting a bad roommate. Also, the more people living in your house, the less space and comfort you will have in your own home.
Prepare Your House For Roommates
After you’ve determined which rooms to rent, now comes the time to prepare your house for an incoming stranger.
Here are some things to keep in mind:
- Determine which spaces will be shared and which are private and off-limits
- Clear shared spaces of anything that is too personal or valuable to you
- Fix up anything that needs attention in common spaces like applying coats of paint and changing burnt out light bulbs
- Place individual lock pads on accesses to private spaces
Determine How Much to Charge
This is an exercise in triangulating your specific situation (how much extra income do you require in exchange for taking on a roommate), pricing a standalone rental, and splitting rent with roommates.
Once you figure out how much you think you should charge, take a look at roommate listing websites such as roommates.com, easyroommate.com or craigslist to see how your rate compares with other rooms in the area.
Screen Your Potential Roommates
This is something that should be done by all landlords and since now you will become a landlord, this is a step you should not miss. Properly screening your roommate will shed light on their rental, credit, and criminal history.
You want to make sure that your roommate is qualified and can afford to pay the rent every month, but now that you will be living with this person you want to be extra careful with a full criminal search.
Create a Written Lease Agreement
Anytime you lease out the property to someone else, even if it’s just one room, you want to have a written agreement in place. This will give you the authority to take action if needed as the owner of the property.
Using a written lease agreement can help ensure that all of your house rules are followed, and doing so will remove any doubt in the case of a dispute.
Be sure to include details such as the rent amount, the rent due date, who pays for utilities and how much, treating common and private areas, and any other roommate or house specific concerns you might have.
You can create your own lease agreement with a property management app like Zuby, which will even allow you to collect rent for your room.