Considerations When Renting Out a Room

Before renting a spare room, discuss pets and parking to ensure a prospective tenant is a good fit.

U.S. News & World Report

Considerations When Renting Out a Room

Modern Bedroom Style Interior

Do a background check on prospective tenants, and always have an exit strategy.(Getty Images)

Renting out a room in your own home to a stranger might cause your friends or family members to raise an eyebrow. However, it's a commonplace practice, especially in expensive cities where people become de facto roommates when apartment dwellers sublet a room. Plus, many homeowners have embraced the idea of renting out spare rooms on a short-term basis to strangers through popular peer-to-peer home-sharing rental platforms such as Airbnb and HomeAway. But if you're used to living alone or with only family in your house, taking in a tenant can be an adjustment.

So if you're going to make the leap from living on your own to being a landlord, keep the following considerations when renting out a room in mind:

  • Understand the laws in your area.
  • Treat prospective tenants as strangers, not friends.
  • Consider getting a background check before you invite a tenant into your home.
  • Interview the tenant thoroughly.
  • Write up a contract.
  • Have an exit strategy if things don't work out.

Read on to learn more about the caveats and precautions to consider before renting a spare room in your own home.

Understand the Laws in Your Area

Every state is different in how they govern landlord-tenant laws. But regardless of the state you live in, you probably aren't legally allowed to enter your tenant's bedroom without giving 24 hours' notice, meaning that if you enter the room without permission or warning, you could find yourself in legal hot water. Plus, you may be held responsible if you, say, barge in and break something of your tenant's.

Treat Prospective Tenants as Strangers, Not Friends

Tell your tenant about your home, but carefully consider what you say about yourself, especially in the beginning of the interviewing process. After all, you probably know nothing about this person, and you don't want to tell a future thief that you keep an extra key underneath the welcome mat, for example.

Get a Background Check

This small investment should give you a sense of whether this is a good match or a future nightmare. Some tools you might check out include MyRental.com, which offers an eviction history search tool for $7.99 or a prospective tenant's credit report for $14.99 or MySmartMove.com, which offers criminal background reports and national eviction reports for $25 to $40, depending on what you select. Another helpful resource is LeaseRunner.com, which offers national eviction reports for $12 and reports of the tenant's financial history of the last three months for $10.

Interview the Tenant

It isn't enough for a tenant to look good on paper. "Tenant screening for live-ins is critical," says Glenn Carter, the chief editor of Condo.Capital, an Ottawa, Ontario-based digital content platform for condo buyers and real estate professionals. "I've heard so many horror stories of bad tenants making your life difficult by being messy, not respecting the space, being up all hours of the night and so on," Carter says. He also suggests walking the prospective tenant back to his or her car "to see how tidy they keep it" to get a sense if the tenant is neat.

Set Written Guidelines

Draw up a contract, suggests Elena Peters, a full-time blogger in Hamilton, Ontario, who runs a website, MakingMidLifeMatter.com, geared toward women. Peters has rented out two bedrooms in her home to two brothers from Jamaica for nearly 10 years.

"They have most definitely become family to me and my sons, but honestly, I realize now that I was extremely lucky considering the fact that I did not fully research or understand how sharing our space with strangers would impact our lives," she says.

The key points to include in a contract, Peters says, include the rent amount and when it is due, and any fees related to late penalties. You'll also want to touch on whether rent will increase yearly, and specify which space is the tenant's, along with common areas and rules for usage. You should highlight if there are any areas that are off-limits. Finally, you should spell out rules for parking and pets.

The more you can think of to put in the contract, the better. And there is almost no limit to what you might put into the contract, according to Peters. For instance you might include: "If they have use of the appliances that you own, will they have to pitch in for replacements?" That may seem unreasonable but maybe not, if your tenants live there a long time. "Be very clear what is for common use and what is not," she adds.

Have an Exit Strategy

You and your tenant should have an idea of how long he or she will be living in your home. You also might want to ask for the last month's rent or a deposit upfront. Apartment complexes often do this; you could, too, in case your tenant one day decides to leave abruptly.

Even if you don't think about the tenant-landlord relationship ending, you should at least consider how things will go if they don't go well, says Kinh Demaree, a startup consultant and real estate investor in Mountain View, California. She has been renting out rooms in her house for about 10 years, knowing from the start that she would have to have an exit strategy to be able to afford a mortgage in the San Francisco Bay area. Demaree has generally had good experiences, but she suggests that you think about what can go wrong.

"Think about what will happen if your tenant gets behind on rent, breaks one of your rules, brings drugs into the house, damages something and how you will handle it. It can be especially awkward if you have to evict someone while they're living in your home," she says.

Even if you can't imagine what you would do in that scenario, it underscores the importance of screening your tenants. She also suggests that the tenant be required to have his or her own renter's insurance policy. "If there's a fire, natural disaster or injury and you have to file it on your insurance, then that could make your insurance premium increase at no fault of your own," she says.

Updated on April 26, 2019: This story was previously published on April 9, 2015, and has been updated with new information.

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