If you need a little extra money coming in to pay your bills, cultivating a side income is a great idea. A way of earning that you can fit around your full-time job and not have to expend too much extra effort. One fantastic means of achieving this end is to share your space with a roommate.
Taking on a lodger can provide you with an extra few hundred dollars each month. It will help you pay off your mortgage and have more disposable income to spend on the things that bring you joy. Your new tenant will provide some extra company for you and your family, as well as someone to keep an eye on things when you go on vacation.
But renting out a room in your home will require a few sacrifices. First of all, you’ll have to share your limited space with another person, and their room will be out of bounds to you while they’re living in it. You run the risk of living with a person you don’t get on well with, and in the worst-case scenario, they could be a nightmare tenant, keeping you up all night and leaving a mess all over the place. If you want to be a live-in landlord, you need to be prepared for these risks and compromises.
6 Tips to Consider When Taking on a Roommate
If you’re committed to the idea and want to give it a go, it may take some time to get there. There’s a lot of work you’ll need to do before you can start advertising for your new housemate. To get you started, here are six tips for renting out a room in your home.
1 – Figure out the details
There’s not just one single way to rent out a room. You could offer a long-term rental agreement in which the tenant stays for as long as they wish, or a short-term contract of a few months if you just want a quick income boost. You could even offer an Airbnb-style arrangement by allowing people to rent out your room for a few nights while traveling. The latter option is less reliable, as you are not guaranteed to fill your spare room every night, and it will usually only work if you live in an area popular with travelers. You won’t be able to vet your tenants thoroughly, but on the plus side, if you get a problem renter, at least they won’t be there for long.
Think about your needs and how long you would want a renter to be staying in your home. It may be a good idea to start off with short-term rental agreements to see if the landlord’s life is really for you. From there, you can build up to taking on a long-term tenant.
You’ll need to hammer out some other details, such as the monthly cost of rent and the tenant’s rules and responsibilities.
2 – Find a space to rent to a roommate
Before you can put an advert out for your first tenant, you’ll need to provide suitable living conditions for them. At a minimum, they will need their own bedroom. Everything else can be shared, such as the bathroom, kitchen, and living areas. Pick a spare room in your house and turn it into a bedroom that would appeal to an applicant. You may need to invest in a comfy bed, some furniture, and a few pieces of artwork to make them feel at home. The room may require a fresh coat of paint or even electrical services if it is not in a liveable condition.
If your home doesn’t have a spare bedroom, there are other alternatives. You could renovate an unused attic, basement, or garage for this purpose. If you have the budget and time for it, you could even build a summer house in your garden to give your lodger some privacy.
3 – Advertise for a roommate
Now that your room is ready to go, you need to promote it to a wide audience. Create an advert and post it on property boards such as SpareRoom or Craigslist. Besides, share your ad on your social media channels and ask your friends and family to promote it to their network. Your advertisement’s goal to make your spare room look appealing to applicants, so do your best to sell your property and its benefits. Talk about the location, the facilities, and the local amenities. Include plenty of high-quality photos of the room and the rest of the house.
4 – Screen your tenants
Before long, you will no doubt have a few interested parties. Since you will be living closely with your new tenant, you will need to make sure they are responsible, reliable, and friendly. You want to get on well with them and have peace of mind that they will pay their rent each month and clean up after themselves. A thorough screening process is essential. The easiest way to do this is to ask for character references from a previous landlord or employer. This will give you an insight into their personality and help you make your decision. An interview will also help you get a better sense of who they are, so sit them down with a cup of tea and have a friendly chat. First impressions are important, so don’t be afraid to turn them down if you’re getting bad vibes.
5 – Inform relevant parties
If you own your home, you might need to inform your homeowners’ insurance provider that you have a new roommate. This shouldn’t affect your policy, but you don’t want to risk invalidating it because you neglected to tell them. Your new landlord responsibilities are more likely to affect your home insurance, so make sure you tell your insurance provider, and take out landlord’s insurance to protect you if something goes wrong.
6 – Fulfill your responsibilities
Once your new roommate moves in, you can enjoy your bonus income each month. But you can’t just sit back and let them do their thing. You must ensure you fulfill all the landlord duties that you laid out in the contract.
The Bottom Line: You save money but gain responsibility when your rent space to a new roommate
When you take on a housemate or roommate, you’ll feel the financial gain right away. But remember you are now a landlord, so that brings with it new responsibilities. Still, the benefits likely outweigh the disadvantages in terms of finances and meeting a new friend.