8 Things You Must Do Before Renting Out a Room In Your House

Renting out a room in a home you own is a great way to bring in some additional income, which can help with a mortgage, remodeling you want to do to your property, or saving for retirement. But there’s a lot of preparation that goes into becoming a landlord, especially if you will be living under the same roof as your tenant. Check out the following eight things you must do before renting out a room in your house.

  1. Know the laws

    The first thing on your to-do list should be determining whether or not it is legal in your city to rent out a room in your home. The landlord-tenant laws for each state are different, so begin your research by calling city hall, the county commissioner’s office, or your city’s housing department. The website for the U.S. Department of Housing and Urban Development is a bit complicated to navigate, but can provide you with information specific to your states’ landlord-tenant laws. Be aware that your local zoning laws may determine how many non-related adults can live in your home.

  2. Purchase homeowner’s insurance

    A standard homeowner’s insurance policy covers an owner-occupied, single-family home, not a home where a room is being rented out to a tenant. Such a policy will not cover damages your tenant may cause to your property or injuries they may suffer from falling down your property’s stairs. Purchase a landlord insurance policy, which generally costs 15% to 20% more than a standard homeowner’s policy. Your peace of mind is definitely worth the extra expense.

  3. Make sure your space is up to code

    Be sure the room you plan to rent out is up to code and meets the standards of local ordinances. Your city’s Code Enforcement Department can provide you with this information. Skipping this step could result in your being fined for a number of violations, so take the time to do the research. And don’t be surprised if you discover you need to do some remodeling to your home before you can legally rent out a room.

  4. Figure out the rent amount

    When it comes to the rent, you don’t want to charge too much, but you don’t want to charge too little either. Be sure to take time to itemize all of the expenses you are incurring as the landlord, including the costs of utilities and trash collection. To get an idea of what the renters market is like in your locality, check out rooms for rent on Craigslist and visit local brokers to see what other landlords are charging their tenants.

  1. Advertise

    Initially, you may want to advertise your room for rent using only word of mouth and your social network. Friends, co-workers, and family members can be a great resource for potential renters. Contact nearby colleges and universities and see if they have an department that advertises rooms for rent to students. Craigslist, which lists various big cities in California such as Los Angeles, San Diego, and San Francisco is another option, as are bulletin boards at locally owned and run businesses.

  2. Run a background and credit check

    Run a background and credit check on any potential tenant. It may sound like a mean and paranoid thing to do, but without a background check, you have no idea if your potential tenant has been evicted previously, is up to their eyeballs in debt, or served time for arson.

  3. Lay down some ground rules

    Living under the same roof as your tenant means there is potential for the same kind of conflicts you’d experience with a roommate. Don’t overdo it, but before you and your tenant sign a lease, lay down some boundaries for behavior that you genuinely find unacceptable. Unreasonable amounts of noise, smoking, pets, cleanliness, and overnight visitors are all things you should discuss and possibly address in writing in the lease.

  4. Have your tenant sign a state-approved lease

    We strongly suggest that instead of a verbal agreement you and your tenant instead sign a state-approved lease, which spells out in detail what your tenant can and can’t do while under your roof. State-approved leases are available for download online. If you have questions about the language in a lease, or want to add to or remove something from the agreement, seek out the advice of an experienced landlord or a lawyer.

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