Renting out a room can be an excellent method to enhance your income while also helping to pay off your mortgage. However, with managing any rental property or space, it’s critical to approach renting out a room in your home with the right mindset if you want to be successful and prevent complications.
In addition, you are placing yourself as a landlord by renting out a room, and as such, there are specific regulatory and legal issues that you need to know.
If you aren’t, you could find yourself in a situation where you have difficult-to-evict renters or expose yourself to potential legal action. So, let’s talk about renting out an unused room and how the process works.
Find a Reasonable Price Point
Before promoting your space, keep in mind that you’ll need to determine how much monthly rent you want by considering the following costs:
- Utilities
- Square footage
- Amenities (laundry, kitchen, bathroom)
- Parking situation
- Average rent in similar spaces and neighbourhood
The last thing you want to do is undersell your space or charge too much and potentially scare away renters who would otherwise be interested. Don’t be afraid to speak to other landlords in the area to get a feel for what they charge to rent out a room.
Advertise the Space
You’ll have to advertise your room to potential renters. Work notice boards are a fantastic place to start advertising. Or, consider looking within your network of friends and family to find a roommate. Many companies help advertise your house where you can list your room for rent to lodgers.
Draft a Lease Agreement
Make the house rules and agreements clear, and put them in the rental agreement. Make sure that both parties sign this document. Once established, avoid changing these house rules unless both parties agree in writing. A rock-solid lease agreement is a great way to protect yourself and the tenant.
You may want to consider asking that they have renter’s insurance to permit them to live there or ask that they leave a damage deposit. Depending on where you live, you will have different requirements as far as lease agreements go when it comes to renting out a room.
Prepare the House
Before renting a room, you should inspect your entire home to ensure safety and that your property meets all applicable habitability criteria.
Some considerations:
- Each bedroom door should have a keyed deadbolt installed
- To avoid lockouts, remove self-locking doorknobs
- Put your valuables in a safe or lockbox
- Appliances, stair rails, fixtures, walls, and flooring need repair or maintenance
- Make sure the room is a legal bedroom suite with windows and the required safety precautions
Choose the Right Room to Rent Out
If you wish to be a live-in landlord, you should choose a spare room to rent and a place to live. It’s relatively uncommon for landlords to rent out their best rooms to maximize their monthly income. But, having a private bathroom can help you get a better rent. Renting a basement with its entrance, kitchen, and bathroom will also bring more money than a single bedroom in a shared living space.
Check Security and Safety
Location and safety go hand in hand. For most tenants, a safe atmosphere is a tremendous motivator. It can be challenging to sleep at night if you’re afraid that yourself or your belongings aren’t safe. As a result, researching crime rates is a must if you’re considering renting a bedroom to a tenant. Adding an alarm system or another security element to your current rental properties is a cost-effective approach to make tenants feel safe and secure in any neighbourhood.
Find a Property Management Company
Rental and property management companies take full responsibility for a property for the contract’s life. These specialists play a critical role in the sector, from providing stability to serving the needs of tenants and owners. One of the most vital demands of the hour is to close the gap between property demand and supply.
Install Necessary Appliances
A homeowner expects to spend for appliances and upkeep, whereas a tenant does not. New devices are particularly appealing to tenants since they reduce the likelihood of a machine breaking down at an inconvenient moment and requiring coordination of repairs. Many tenants are ready to pay a higher rent if the property includes an in-unit washer and dryer. Washing clothing at the local laundry can be expensive and time-consuming.
Final Thoughts
Renting a room in your home can help you pay down a chunk of your mortgage and alleviate financial stress. First, however, you should carefully select the proper renter by putting them through a thorough screening process and meticulously tracking your income and expenses.
