6 Steps For Renting a Room in Your House

With the rising costs of housing in California, there has been an increase in opportunities for homeowners to rent rooms out for extra income. In fact, in 100 of the largest housing markets in the US where costs are rising, a large segment of boomers with two or more unoccupied rooms are now offering this part of their property for rent.

Benefits and Drawbacks of Renting Rooms 

If a homeowner was to list these secondary bedrooms on one of the popular websites, like VRBO and AirBnB, they may find that they can make a substantial income. 

There is a trend for boomers to want to age in their own homes, and, to reduce overhead, room rentals is a great solution. But, it’s not only the homeowner who benefits. 

When renting a room, the tenants have an all-inclusive solution for their housing needs. Typically, the rental price includes electric, water, gas, and Internet, which helps these renters when budgeting. Those who rent from Boomers are known as Boom-mates. 

However, there are also drawbacks when renting a room. The first is your safety. Be sure to call references and past landlords before making any decisions to take in a renter.

Also, having someone new in your home that’s not related to you can also feel strange. Keep in mind personality fits. Family members could feel uncomfortable with sharing space like bathrooms, kitchens, and other common areas. To reduce the awkward feeling, spend some time getting to know your potential candidate. Introduce them to the entire family before making any commitments.

Moving Ahead with Renting a Room

If you’re ready to make this happen, be sure to consider these six steps before you rent:

1. Secure your valuables.

When you invite anyone into your home, you should think through where you will store/keep valuable items, important documents, and financials. Banks offer safe deposit boxes to store these types of things.

2. Check HOA rules and local laws.

Some cities prohibit vacation or short-term rentals. Or, your Homeowner Association (HOA) may not approve room rentals or short-term rentals. Speak to your Community Association Management or review your CCRs before taking steps to rent.

3. Prepare a set of questions for the applicant.

Asking questions to understand an individual and their habits could be very revealing. Create an application and strategy to ask every applicant these types of questions:

• Do you smoke?

• Have you ever been evicted?

• Where do you work and for how long?

• If I were to call your current landlord, would they offer a good reference? Why or why not?

• Will you be able to pass a background check?

• What does your ideal living situation look like?

• Why have you decided to move from where you live now?

  
  

4. Perform a background check.

When you have found a suitable candidate to rent your room, the next step is to run a background check. It could be a simple credit check or a full criminal report. They vary in costs.

As a landlord, the Fair Credit Reporting Act states that you must use a Consumer Reporting Agency (CRA). They protect the privacy of your tenant, which is important. Should you decide to turn down an applicant, the law requires that you give them a reason. See detailed information on how to address this by visiting the website for the  Consumer Financial Protection Bureau.

5. Decide on boundaries and a lease agreement.
We all need our personal space to feel safe. Your tenant is no different. You will need to respect their space, too. That means the area they rent is off limits unless you have received permission to enter. There will also be parts of the house that you want to label “off-limits” and that will be important to outline at your first meeting and within your lease agreement. 

Don’t forget to collect a security payment and outline within the lease what conditions would forfeit the deposit. Each state has its own laws on rentals. For detailed information, visit HUD.com.

6. Know federal and state government regulations.
Check your state laws on housing to best protect you from accusation when you deny anyone. Also, use a reputable credit reporting agency. Be aware that, under the FHA guidelines, you cannot refuse to rent a home based on: Race; Sex; Disabilities; Religion; National origin; and Gender preference (in some states like California).

Check out the Human Rights Campaign for state guidelines.

Get Expert Advice

For more information on this topic or other real estate-related questions, contact Liz Jones.