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How to Make Money Renting a Room
Renting a spare bedroom in your house is a great way to earn extra cash, but a lot of people who are considering it don’t know much about the money, time, and effort that goes into it. Renting a room in your home should be no different than renting out an apartment or home as a landlord; you’ll need to be prepared to provide a certain level of hospitalityand amenities, and you’ll have to ensure your lease includes clear rules and regulations to keep both you and your tenant comfortable. There are a few things as a landlord that you’ll need to be prepared to provide, and in this guide, we offer plenty of advice for renting out a room in your house.
Prepare Yourself
Are you thinking of renting a room in your house, but aren’t sure if it is right for you? Many first-time renters aren’t aware of the amount of work, time, and money that can go into renting a room in their homes. So, before you get started, you’ll want to make sure you are prepared for everything that comes with being a landlord.
Can You Legally Rent A Room in Your House?
The very first thing you’ll need to do before you rent out your spare bedroom is to check the rules and regulations on renting a room in your area. Rules for renting vary by state, and even in states where it is legal, be sure to research your specific area. Some areas are bound by HOA rules, which can prohibit room rentals. Some areas allow you to rent a spare room in an apartment, while others don’t. You want to be sure that it is legal to avoid any fines or legal action.
Are you A People Person?
Before you rent your spare bedroom to a stranger, consider whether you are a “people person.” If you can’t imagine the thought of sharing your kitchen or living space with another person, this may not be right for you. We all have different personalities and come from different cultures, so really take the time to think about your comfort level. You don’t want to rent a room to a tenant, only to hide in your room all day. You should be comfortable using your home as you normally would while you are renting your spare room.
Are You Willing/Able to Provide Hospitality Services?
Another thing a lot of first-time renters don’t think about before renting out their spare bedroom is the level of hospitality that they’ll need to provide to their tenants. When you rent out a room, your tenant expects you to act cordially and be available if they have any questions or concerns. They may require you to be readily available to fix things such as plumbing, televisions, or even furniture. You’ll also have to provide a certain level of cleanliness, so be prepared to do it yourself or outsource it to a cleaning company.
Are You Able to Enforce Rules?
When you rent out your spare room in your house, you’ll want to establish a set of rules, such as the use of shared spaces, visitor rules, noise levels, etc. Once your tenant agrees to the rules, you must ensure that they are enforced. Ask yourself if you’re willing to let your tenant know if they are too loud or if a visitor has stayed too late. Enforcing the rules will help keep you and your tenant on the same terms so that you can comfortably share your space.
Legal Issues
Other than ensuring that renting your spare bedroom is legal in your state/area, there are a few other legal issues you’ll need to consider to protect yourself and your home. These range from your lease agreement to purchasing insurance.
Lease Agreement
When creating a lease agreement, the best thing to do is to consult a lawyer to help draw up the terms of the contract. A lawyer will ensure that everything is covered under the lease, from payment schedules to reasons for eviction. Remember that many things that need to be covered in your lease to help protect yourself, your home, and your tenants. Things that should be included are time allotted after an eviction notice, the rights and responsibilities of the tenant and yourself, utilities, any extra fees that may be included, house rules, and the length of the lease agreement, among others.
Insurance
Another thing you’ll need to research in your area is insurance. Purchasing insurance that covers your home and your personal belongings along with any rent money that is lost can help you in the long term. Some companies will cover the loss of rent during the time of any repairs or if anything happens, ensuring that you still get paid. You may also want to require that your tenants purchase renter’s insurance to cover their belongings if your insurance doesn’t.
Short-Term vs Long-Term Tenants
When consulting your lawyer to create your lease, one thing you’ll come across is the question of whether you choose to rent long-term or short-term. You can rent by the month or year, or even on a nightly basis. Consider things like cleaning in between renters when choosing whether to rent long or short-term. If you rent by the night, you’ll have to have the room cleaned every day before the next tenant arrives. If you choose to rent long-term, you risk having to live with a tenant that you may not like until the lease is up.
House Rules
Any house rules that you create should be followed by your tenant. Things to consider include:
Can they have friends over? If you allow visitors, be sure to set clear boundaries about visiting hours, noise levels, and whether sleepovers are allowed.
Who cleans the home? Cleaning needs to be discussed and written in the house rules. If you are taking turns, a cleaning schedule should be created so that you can ensure proper cleaning. If you plan on keeping the house clean yourself, it can be a big job, so you may want to consider outsourcing this task to a cleaning crew.
Are parties or BBQs allowed? If you want to allow things like parties, BBQs, or get-togethers, be sure to include any rules in the agreement. Keep in mind any risks that may be involved.
What areas are off-limits? Have clear, written instructions on any rooms, patios, garages, or bathrooms that are off-limits. If you don’t let your tenants know ahead of time, they may mistakenly use your bathroom or park in your garage.
When Is Rent Due? Rent should be discussed, and the terms should be thoroughly written out. Due dates, late fees, and reasons for eviction should all be included.
Who provides household items and toiletries? You can provide all toiletries and household items for your tenant, including cleaning supplies, trash bags, and toilet paper, or you can include a small fee if your tenant requires these supplies. Giving them the option of providing their toiletries or paying a small fee can help increase prospective tenants.
Will food be shared? Clear expectations on whether food is included in the rent or whether the tenant will provide their own should be discussed and written in the house rules. Keep in mind that we are all from different cultures and backgrounds, so sharing food is not ideal unless you like to cook new dishes.
Preparing Your Spare Room
If you feel that renting your spare bedroom is the right decision and you are ready to move forward, there are a few things you need to to do prepare your room for your new prospective tenants.
Furniture
You want to make sure that the bedroom you are planning on renting is furnished with the necessities: a bed, a place to store clothes such as a dresser or closet, a nightstand, and a desk are a good start. Remember that your guests will also be sharing things like your couches, televisions, washing machine, dryer, dishwasher, microwave, refrigerator, and stove, so you want to be sure these items are working and up to date.
Amenities and Services
Your tenant will probably expect certain amenities–and rightly so. They’ll need a bathroom, whether separate or shared, and many people expect a strong wi-fi connection. Think about whether you are going to provide services such as cooking for the tenant, cleaning, or doing laundry. Some people provide all toiletries, such as towels, clothes, toilet paper, shampoo, and even soap. Decide what amenities and services you’re willing to do that would add value to a tenant considering renting a room in your home. The more amenities and services you have to offer when renting a room in your home, the more you can charge for the room.
How Much Can You Charge to Rent a Room in Your House?
This depends on the area you live in, the furniture, and any amenities and services you provide to your tenants. If you plan on splitting the utilities, then the charge per month can vary as the light or water bill rises and falls. The area that you live in is a big factor in the amount of money you can charge to rent a room in your home; if you live in an in-demand area or near popular tourist attractions, you can charge more than in other areas. You’ll want to research online to find comparable prices of rooms for rent in your area to get a better idea of how much you can charge per month.
Advertising
Once you’ve got your room ready to rent, the next step is going to be advertising it to get prospective tenants. There are many places where you can advertise the room you’re renting online, and some include Airbnb, Vrbo, Craigslist, and social media. Sites like Airbnb and Vrbo are great because they help prospective renters come to you and come with their own payment systems and even in some cases, insurance. Advertising on Craigslist or your own social media has the extra obstacle of creating your own payment system, so be aware of this when you do advertise your room for rent.
You also want to ensure you have professional photos of the spare room, showing all the spaces included in the agreement, such as bathrooms and shared spaces. A professionally written description of the room you want to rent will help customers visualize the room and imagine their experience there. Great photos and a description can go a long way in getting prospective tenants.
You can make quite a bit of money from renting a room in your home. It is becoming more and more popular to make money from spare bedrooms these days, and many people are in the market for long and short-term stays in places all over the world. I hope this guide will help you on your journey to becoming a successful renter!