Landlording & Rental Properties

Is Renting Out a Room in Your Home Worth It? New Data May Surprise You

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couple walking in front door of vacation rental with suitcases

The rise of Airbnb has taken renting to a whole new level. Extra income, real estate opportunities, and the luxury of travel is now all wrapped into the ease of a phone app. While the majority of real estate owners tend to rent out their entire property, renting a room, finished basement, or detached guest house can have the same financial rewards.

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But how many homeowners actually rent out their space while still living in it? 

According to a recent study by Homes.com, a whopping 74 percent of homeowners said they rented out their properties for some extra cash. A third said they were in it for help paying their mortgage and 22.4 percent rented to pay property taxes.

While most hosts rented out a spare bedroom, over a quarter of homeowners rented out their finished basement. Detached guesthouses and garage apartments were also up for grabs, but only 16.6 percent and 13.5 percent listed those spaces, respectively.

nicely decorated bedroom with big windows and open curtains

Rental apps and listing sites make the renting process look easy, but for the majority of hosts, it entailed much more than a simple post. Over 63 percent of homeowners said they had to do some home updates before they were ready to rent—the most common being painting. On average, updating the paint cost owners $615.81, but flooring updates—which 51 percent reported completing—cost an average of $1,062.  

Home updates can get pricey, especially when more than one room needs some TLC or significant structural changes are necessary. However, minor, less expensive renovations can increase the value of a home, and for renters, the price tag of readying a rental seemed to pay off.

Long-term rentals earned hosts an average of over $1,000, while short-term rentals put over $800 in their pocket, on average. Considering their profit amounted to more than half of their mortgage, home modifications may be a worthy investment.

Related: The 5 Best Home Renovations to Increase Your Property Value

Renting Without Regrets

While renting can be financially beneficial and a relatively easy side hustle, there are risks homeowners should consider before taking the plunge. Any income made through renting is taxable, and if renters don’t consider the long-term hit, they may undercharge for rent.

In fact, the Homes.com study found that the most common regret among homeowners was charging too little—33.5 percent said they wished they charged more. On top of standard payments, homeowners take the chance of having their property damaged by renters—or worse, an unruly renter who doesn’t want to leave.

airbnb-tips

While homeowners seem to be aware of the risk, with nearly half finding tenants through friends or family and performing interviews, some still had regrets. Over 17 percent of homeowners said they wished they spent more time screening potential tenants, while 15.6 percent and 13.8 percent said they wished they formed better relationships with the tenants and conducted background checks, respectively.

Related: Airbnb Horror Stories (& How You Can Prevent Your Own)

Turning Your Home Into a Side Hustle

As with every other business, the risks are something that homeowners just have to take. Fortunately, less than one in four homeowners had regrets about renting their space and an impressive 80.5 percent had a positive experience doing so.

Turning an extra room or guest house into a money-earning asset seems to be worth it—and the growing industry is proof. 

Are you considering renting some or all of your home on Airbnb or similar sites? Or have you done so already? 

Share your thoughts below. 

Jamie Greenberger is an Assistant Editor in the homes and real estate industry. With 2+ years experience in copywriting, editing, and research, she offers a fresh take on the real estate industry. She holds a B.A. in Psychology from Georgia State University and is currently based in Atlanta.

    Adam Reynolds Rental Property Investor from Ventura, CA
    Replied 26 days ago
    I rent out my spare bedroom/bathroom for $1400+ per month to long-term tenants (30+ day stays) through Airbnb. Pays for more than half my mortgage. Love it.
    Monica Diaz Investor from Fort Lauderdale
    Replied 26 days ago
    Hi Adam, Since you're renting for 30+ days, do you provide your guest use of your kitchen? If not, what appliances to provide them in your spare bedroom?
    Sheng Peng Investor from Houston, Texas
    Replied 26 days ago
    I rent out 2 bedrooms for short term rental at Airbnb. It pays property tax, HOA fee, water, electricity, wifi, cell phone, gas, food, auto insurance, home repairs, exp ex and savings for down payment for another house. I plan to rent out the third bedroom. The possibility is endless.
    Chris Williams from Fremont, CA
    Replied 26 days ago
    This is part of my 'jump-off' plan. Either buy a house where I can host via AirBNB (finished basement, detached studio), or a small multifamily where I can use one of the units for the same purpose. Use the revenue to cover mortgage. Save up, buy another property, repeat.
    Mary George from Philomath, Oregon
    Replied 25 days ago
    We started renting our basement on airbnb 5 yrs, when we became empty nesters. We had our first renter within hours and we were hooked immediately. We found guests to be pleasant , respectful and interesting if the opportunity arose to meet them. Most times they are left to their own, unless they want interaction. After the first year, I was so bummed to keep turning people away, because we were already booked, we cleared out an above shop storage space and created a 'Scenic Loft", with a deck out the back . We had our 2nd airbnb! Since then we have been renovating houses, and airbnb them until they sell, to cover the mtg. pymt. We've had as many as 6 airbnb listings. Our primary home is now a true asset, creating more cash flow than our mtg. We kept one of our high end flips as an Airbnb, as we find it rents incredibly well, all dressed out. We can be patient and wait for our price while we cashflow great income. I actually don't care if it sells. My goal is to get to 10 listings!