When you mention renting out a room in your home to a stranger, friends and family may look at you askance. But the fact is it is becoming a fairly common practice, especially in expensive cities. It can be a great way to supplement your income, but it can also be a huge disaster, with danger and legal ramifications. So to help you toward success in such an endeavor, we offer these tips for renting out a room in your house.
Know the Law
There are some pretty strict laws governing tenants and landlords. So you need to familiarize yourself with your state’s tenant-landlord laws before renting out a room in your house. For example, you have to give notice (typically 24 hours) in order to legally enter a tenant’s room. But if you fail to give notice and get permission – even though you own the room and it is in your house – you may land in legal hot water.
You definitely need to interview potential tenants before renting out a room in your house. And in the course of the interview, you’ll likely have to provide information about yourself, but be cautious and circumspect. Remember that tenants are not your friends. They are strangers, and this will be a business relationship. Don’t volunteer information, such as where the spare house key is hidden, that can invite problems.
Stick to Your Non-Negotiables
Determine your non-negotiables, and then stick to your guns. Make sure that renting out a room in your house is done on your terms. If, for example, you want a non-smoker, put that prominently in your ad, mention it in the interview, and put it in the contract. There must be consequences if a tenant violates the lease terms.
Perform a Background Check
Don’t fail to perform a background check if you want to avoid a nightmare when renting out a room in your house. There are plenty of online search tools, and the small fee they charge is definitely worth it. You should check a potential tenant’s criminal background, as well as her credit report and eviction history. Some of the online tools you can use for this include MyRental.com, MySmartMove.com, and LeaseRunner.com.
Get It in Writing
And, of course, renting out a room in your house means that you will need a formal written and signed rental/lease agreement that spells out in detail all the terms and conditions. A verbal agreement won’t hold much water in court.
Your agreement should include at least the following:
- Length of contract
- Amount of rent
- The due date for payment (and penalties for late payment)
- What percentage of utilities the tenant pays, how that is determined, and how it is paid
- Handling of access to common areas, for example, kitchen, bathroom, laundry area
- General guidelines treating noise, traffic, hours of coming and going, and so on
- Penalties/consequences for violating any of the terms in the agreement.
Have an Exit Strategy
And renting out a room in your house also means having an exit strategy because no matter how thoroughly you vet a potential tenant, she just may not work out. An important part of your exit strategy will be collecting the last month’s rent and deposit upfront. Many apartment complexes do this because it provides some financial leverage if things go wrong or if the tenant simply skips out in the middle of the night.
But if everything does go right (and it likely will if you screen tenants and have a good agreement), you may wonder why it took you so long to decide on renting out a room in your house. Your local real estate agent can be a great asset when marketing your rental room. Your agent can help you target the kind of tenants you want.