Here are some tips for renting out a spare room and earn extra income
If you have a spare room in your home, a finished basement, for example, it could be a great way to make some extra money every month. Just like you can make some easy money with your car, renting out a spare room for extra income is an excellent way to make use of space that is just sitting empty.
If you decide that renting otherwise wasted space is the right choice for you, you can explore two options.
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Firstly, you can have a long-term tenant and make some steady monthly income. Secondly, you opt to rent to tourists, in which case you charge per night. Potentially, it can be a source of a much higher income.
However, whichever way you decide to go, you will need some tips for renting a free room in your home. Let’s see what they are.
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Check if you can rent a room in your home
First things first, before you rent the room out, you must check if you are legally allowed to do so. For example, if you are renting the place, your landlord may not let you sublet the extra room.
Therefore, make sure you are clear with your landlord about this, so you don’t have to learn the hard way. Also, it may be illegal for you to rent even if you are the owner of the place. So, be sure to check the rules and regulations.
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Consider if renting out a spare room for extra income is smart
You need to consider several things before renting out a spare room for extra income. Firstly, you must understand that this will likely have some impact on your privacy. Be sure you are okay with that. Moreover, ask yourself what it will look like if your renter brings some friends. Also, you should expect an increase in your utility bills.
You will have to make space for the renter’s belongings.
Furthermore, you probably have some valuables in your home. You must consider this because you will be letting a complete stranger into your home. Luckily, renting a storage unit will easily solve this issue. And since you will also have to make room for your renter’s belongings, you can put excess items out of your way in there, too. However, renting a unit will be an additional expense. So, make sure you put that into your calculations.
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Who will you be renting to?
When you decide to rent a free room out, you will have to interview the candidates. Firstly, ask yourself if you are the kind of person who can boldly ask questions, negotiate rules, and request rent payments.
If you live alone, it may be wise to ask a friend to be there with you while you conduct an interview.
Then, think about who the typical candidates for a single room are. They are most commonly immigrants who still don’t have a job, recently divorced men, students, and recent graduates.
Think about the pros and cons of renting to each of them. For example, students can be loud. Immigrants may want to cook smelly food. And, as for safety, it might be best to rent to a friend or a friend of a friend.
If you are renting out a spare room for extra income, you must interview potential tenants.
Questions to ask when interviewing potential renters
Even when you rent an entire apartment, you should interview potential tenants. This is even more critical when letting people into your home. You should interview people to see if they are mentally stable, they will pay the rent on time, and if you will get on well with each other.
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Here are some questions you should ask:
1. Where do you live now?
2. Why are you leaving your current place?
3. Does your landlord know you are leaving?
4. Can you pay the first and the last rent?
5. Have you ever been late with your rent payments?
6. When are you planning to move in?
7. How long are you planning to stay?
8. Where do you work?
9. Do you work odd shifts?
10. What is your monthly income?
11. Have you ever declared bankruptcy?
12. Do you have pets?
13. Do you own a car?
14. Do you smoke?
15. May I contact your previous or current landlord?
16. Have you ever been evicted?
In the end, you may also want to do a background check. And ask the potential renter if they have any questions for you.
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Research the appropriate renting price
Now that you have decided whether renting is the right option for you, you must do thorough research to determine what the fair price for your place should be. Too low of a price may get people wondering what the problem with it is, and you will lose money.
On the other hand, pricing it too high will only put people off and make them look elsewhere. So, what you should do is look at Craigslist, for example, and compare your place to similar ones in your area.
Will you cover any additional costs?
Before you rent the room out, decide if the renter will pay the same amount of money monthly, or you will split everything.
For example, we have already mentioned increased utility bills. Will you be splitting the bill every month, or will you account for that in your monthly rent price? Here is what you should think about:
• Utilities: water, electricity, sewer, gas.
• Cable and internet.
• Parking.
• Will you rent a furnished room?
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Establish rules
Let’s make it clear that you must always sign the leasing contract with your renters. This contract should include all the rules you have established. Thus, before you draft the agreement, think about all the common reasons for disagreements and things people usually fight about.
You will avoid many unpleasant situations if you state the rules and expectations clearly in the contract and discuss everything beforehand. Always sign a contract with your tenant.
Alt: A man handing his potential renter a contract to sign and a pen.
There are some of the things you should talk about with your renter:
• Pets
• Overnight guests
• Noise, music, parties
• Parking place
• Areas that are off-limits
• When is the rent due?
• How will you share areas, such as the kitchen and the bathroom?
• Who pays for garbage bags, toilet paper, detergent, etc.
If you don’t want to share the kitchen, you can put a mini-fridge and a microwave in their room.
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Conclusion
These are our tips for renting out a spare room for extra income. While it is an excellent source of passive income, you must always be extra careful when letting strangers into your home. If you do the tenant screening process well and set some ground rules, you will have no problems.