A great way to make extra money is to rent out a room in your home. Renting out a room can be a sensible choice if you want to reduce your debt, save money for a significant purchase, or just have some extra cash on hand. However, there are a few things to think about before you start marketing your extra room.
If you’re in need of some extra cash putting your room up for rent is a great way to bring in extra cash every month. Unless your HOA or mortgage says it’s not allowed. This is a great way for many new and older homeowners who have been making money for many years. At the same time, it isn’t as easy as posting a “for rent” sign in the front yard and starting collecting cash every first of the month.
There’s a lot to take into consideration first, the pros at the Local Records Office have created these tips to help you rent out your room or back house but yet be aware of the pros and cons.
Check your local laws and ordinances first before renting out a space in your house. Short-term rentals are subject to strict regulations in some cities and towns, so make sure you are in compliance before you begin. If you have a homeowner’s association, you should also confirm that renting out a room is permitted there.
Rent Your Room Out Step #1: Become a Landlord
Renting out your extra room or back house might not feel like a true landlord but in the eyes of the law, you definitely will be one. What does this mean? This means that you should learn how to become a landlord and follow all the tenant’s laws in your state. Obviously, the laws are different in every state but most are somewhat similar like; respecting tenants’ privacy, giving proper paperwork when rent is late, making repairs in a timely manner, and providing a safe environment to live in.
When you decide to make the transition from a homeowner to a landlord visit these sites for further information, Landlordology.com, and NOLO.com – and see if your extra room or back house qualifies for an in-house tenant. For example, if the extra room you have for rent doesn’t have a bathroom in the room it might cause a problem with the other people who also live in the residence.
You also have to see if the room is in good enough condition to rent. Does the room have proper ventilation; does it have a proper paint job? These are all things you need to look at before renting.
Rent Your Room Out Step #2: How to Find Potential Tenants
In your mind, you might have the perfect solution to bring in extra cash but don’t neglect the fact that you still have to get the information out there. Keep in mind that you have to advertise the room that’s for rent, talk to potential tenants and deal with potential tenants.
The right tenants should be everything you’ll expect a roommate to be since he’s going to be on the same property he or she will literally be your roommate, so choose him or her carefully or else you’ll be bumping heads with him. All potential tenants should be screened for their credit and criminal background check. You don’t want to rent to a person who has a history of paying bills late or has a criminal history.
You must establish the rental’s terms and conditions after deciding on the type of rental. This covers the monthly payment, the security deposit, the duration of the lease, and any guidelines for using the common areas in your house. To protect both you and your tenant, it’s a good idea to have a written contract outlining the terms of the rental.
Rent Your Room Out Step #3: How to Draft a Lease
Many people think since you are only renting a room or back house that you don’t need a lease or contract. As a new landlord, you need to protect yourself, a verbal agreement will not hold up in court, he said and she said rarely works in court. Make sure to carefully create an agreement that you feel comfortable with and yet not too strict where the tenant is forced to stay inside. The contract should have information about late rent, curfew (if any), loud music, and privacy.
The practical aspects of renting out a room in your house must also be taken into account. This entails maintaining the room in good condition, furnishing it with the required furniture and linens, and establishing rules for shared areas like the kitchen and bathroom. Setting clear guidelines for communication and privacy with your tenant is also a good idea.
A security deposit is a wise thing to ask for when renting your room if any damage happens when the tenant is living there you could easily repair it with the security deposit. Make sure to check with your state laws to see what is the best way to go forward with the security deposit.