Renting a room in your house is one way to make your monthly mortgage payment easier on your budget. This solution can be particularly appealing to empty nesters who suddenly find themselves with more house than they absolutely need.
If you’ve never rented out part of your house before, it may seem like a daunting prospect. Can you make this venture as profitable as possible?
Here are some rent-maximizing suggestions for first timers:
1. Assess your rental from a renter’s perspective. Be honest with yourself about which of your available spaces will fetch more rent from a responsible tenant. A room with access to a private bathroom, or a room with a separate entrance, for example, are both more desirable than a single small room. You may consider vacating your master suite and moving to a smaller bedroom if you want to justify charging higher rent.
2. Know what rents your local market will bear. The website Rentometer.com makes it easy to compare your rent with other local properties. This helps you price your rental attractively, without charging too little.
3. Do a credit and background check. Personally interview all possible renters, then do a credit and criminal background check on your final choice. Sites like Equifax Identity Report charge $9.95 for this service – a good investment in your peace of mind and personal safety.
4. Draft and sign a formal rental agreement. Having rights and responsibilities clear before your renter moves in goes a long way toward maintaining a comfortable living situation – and protecting the profitability of your rental arrangement. For example, will your renter pay a flat fee every month, or will she pay for a portion of the utilities, which will vary monthly? Nolo.com has a great post on this topic called Ten Terms to Include in Your Lease or Rental Agreement. In addition, you’ll want to make yourself familiar with the terms of the Landlord and Tenant Act in your state, which covers issues like maintenance, privacy, and so on.
Have you ever rented out a room in your home? Please share your insights!