Renting A Room For Extra Money
I don’t mention it often, but I was married before. It didn’t work out and we separated and then later divorced when I was in my late thirties.
After we separated, the only way that I was able to afford the house on my own was to get roommates to help defray the costs.
The house had two bedrooms downstairs and I rented each for $500 a piece (in 2000). I lived upstairs in the Master Bedroom which had a private bath. The two tenants shared a bathroom downstairs and we all shared the kitchen. We worked out a system for taking turns with winter snowplowing, shoveling and cleaning.
Within a couple years, Dave and I met and started dating. He eventually moved into that house and we worked to fix it up, remodeling bathrooms, added a metal roof, replaced cabinets in the kitchen and laundry room and added new carpet.
We sold it in 2017 for a tidy profit.
But it never could have happened had I not found a way to stretch a buck when it was needed.
While renting a room in your house most likely will not make you rich, it may earn you a good amount of side income. I know of a few people who rent out many rooms in their home and have been able to pay off their home completely due to this.
There are many things to think about if you are interested in renting out a room in your house. It's not an easy decision and will require some thought. Some people love the extra cash that renting a room in your house brings, while others prefer their privacy too much to even consider the notion.
Side note: This post is about renting a room in your house on a long-term basis. If you are interested in renting out a spare room on a short-term basis (such as for vacations), I highly recommend you check out Airbnb. We have our primary residence on Airbnb and I know people who are making thousands of dollars a month by renting out rooms, campers – even camping spots on their property!
Here's what you need to know when renting out a room in your house for extra money.
Make sure you comply with local laws
Before you spend any more time, you should always make sure that you can actually rent out a spare room in your home. If you are unsure, it might be a good idea to check with laws in your town as some towns are a little picky when it comes to rentals.
If you are renting your home from someone else, then it's always wise to ask for your landlord's permission. They might want a new contract written up or they might even say no.
If you live in a neighborhood that has a homeowners’ association, sometimes they don't allow renters either. It's very wise to check with your HOA so that you don't get fined.
Do your research before you set a monthly rent
Setting a price for your rental can be a tricky part of this equation. I highly suggest that you do your research before you assign a random number on your spare room. If you price it too low, then you may actually end up costing yourself money in the end (due to wear and tear, utility bills, etc.).
Also, if you price it too high then no one may be interested.
You can determine the price of your room rental mainly by checking comparables. You can check what other spare rooms are going for in your area, what extras they may be offering, whether there is a private bathroom included or not, and more.
One thing you will have to determine is whether you will include utilities in your rental rate, or if you will split all bills with your new roommate.
For me, I like to just make it easy and include it. However, you may lose money if your new roommate is wasteful when it comes to electricity, water, etc. By splitting utilities, your roommate will most likely be more mindful of what they are using.
Advertise that you are renting out a room in your house
There are many places where you can advertise your rental. You can put a sign on your front lawn, advertise in a newspaper, or place an ad online on a website such as Craigslist.
Everyone and everything is online now, so posting your ad online will most likely be your best choice.
Always be honest with what you list in your advertisement. You should be honest about how big the room is, what rooms come with the agreement, if there is a separate entrance, and more. Also, be sure to include pictures of what is included.
Interview possible roommates
You should never just take any random person when renting out a room in your house. Always conduct interviews just like you would if you were renting out your whole home.
Conducting interviews is important because you can learn more about the possible roommate, weed out any crazy people, and determine if the two of you will get along. You will be living within feet of them, so this is a very wise step to take.
You can also do a background check if you would like as well. After all, you will be living with them!
Always set rules when renting a room in your house
Before your new roommate moves in, it is always a great idea to talk about (you may even want to create a contract) the many things that people fight about once they move in together. This can help prevent arguments.
Some of the things you may want to talk about include:
· How long is the lease term? Six months, a year? Month to month?
· What day is rent due? Who pays for utilities? Food?
· Who buys things like toilet paper and trash bags?
· Can they have friends over? What about a party or a BBQ? What about sleepovers?
· What noise level is allowed?
· Who is responsible for cleaning?
Would you ever consider renting a room in your house for extra money? Why or why not?