When you’re looking to make financial ends meet, renting a spare bedroom in your home or apartment can be a wonderful opportunity. It can help offset expenses, pay the mortgage, and justify your investment.
With that being said, you should approach the opportunity to rent out a spare bedroom with caution. Any time you’re bringing someone else into your home, you need to be aware of the potential risks and consequences.
Before we dive into the following seven points, let’s be clear about one thing: Renting a spare bedroom can be a great choice. However, the key is to protect yourself so that it doesn’t backfire. Now that you understand that, let’s discuss a few key points:
You have a certain standard for your home that others can’t be expected to uphold. From small things like using coasters so that you don’t get rings on your table to bigger issues like locking the front door on the way out, your tenant probably won’t be as cautious with your property as you are. There isn’t always malicious intent behind a tenant’s behavior – it’s often laziness or oversight – but that doesn’t make it any less of an issue.
So, how do you physically protect your property? Well, the best remedy is to collect a security deposit on the front end. A security deposit is usually equal to a month of rent, but you can set it as high or low as you’d like. This deposit won’t protect you from huge issues, but it will give you a little bit of a safety net for smaller problems.
Even if your spare bedroom has its own separate entryway or floor, you’re going to lose some privacy when you bring another individual into your home. Depending on your personality type, this may be a small issue or a big deal.
The best way to maintain some sense of privacy is by setting things up in a way that gives both you and your tenant space. Consider installing an exterior door for the bedroom so that they can come and go without accessing the rest of the home. If the bedroom is on the second floor, a simple spiral staircase may work. It’s also a good idea to have a conversation with the tenant to let them know that you like your space.
While putting up a Craigslist ad for your spare bedroom may be the easiest option, it’s not the safest solution. You need to be very strategic about how you find tenants – and you must have a screening system in place.
Specifically, you need to get a background check on every potential renter (even if the person was suggested through a mutual friend). “This small investment should give you a sense of whether this is a good match or a future nightmare,” personal finance expert Geoff Williams says. “Some tools you might check out: MyRental.com offers an eviction history search tool for $7.99, or you can pay a little more and find out other things like a prospective tenant’s credit score. MySmartMove.com, for $25 to $35, offers similar background information. LeaseRunner.com has a comprehensive tenant screening for $30.”
Even with the right tenant screening methods in place, you still have to be aware of your surroundings. It’s a smart idea to set up personal security strategies to protect yourself. This includes putting a deadbolt lock on your bedroom door, only giving the tenant a key to their personal entry door, keeping valuables locked away in a safe, and even setting up security cameras.
This may all seem excessive – and it probably is in most cases – but you can never be cautious enough when it comes to living with someone you don’t know that well.
If you don’t own the property and are renting from someone else, don’t automatically assume that you can sublet. Creating a separate rent agreement without the knowledge of your landlord can land in you legal trouble. Read your lease agreement carefully and let your landlord know if you plan on subletting.
“Make a written lease instead of an oral arrangement,” landlord Laura Agadoni says. “Everyone remembers a verbal agreement differently and it is tough to prove in court.”
Some of the things you need to put in your written lease agreement include: the amount of monthly rent, the date the money is due, renter’s responsibilities for utilities, common area guidelines, parking requirements, cleaning stipulations, and termination rules.
There’s normal wear and tear…and then there’s property damage. Make sure both you and your tenant are aware of the differences. The best thing you can do to safeguard yourself is to conduct a pre-lease property inspection before move in, as well as a post-lease inspection upon moving out. During these inspections, you should be able to identify whether or not there’s any damage that needs to be fixed.
When you choose to rent out a spare bedroom in your home or apartment, you essentially become a landlord. And with the title of landlord comes great responsibilities. You suddenly have to pay attention to legal issues, lease agreements, taxes, tenant screening, and everything else that goes into the process.
Once you discover the financial rewards of being a landlord, you may eventually decide to purchase separate investment properties. If you do end up going this route, then you’ll want to hire a professional property management firm to handle the logistics.
At Green Residential, we’d love to handle this for you. We have more than 30 years of experience in the Houston area and are widely recognized as the premier name in the industry. Contact us today and we’d love to share some details with you!
TREC Broker License # 9001367
CALL US
CALL US