{"id":178759,"date":"2024-11-04T13:41:31","date_gmt":"2024-11-04T20:41:31","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=178759"},"modified":"2024-11-12T10:21:31","modified_gmt":"2024-11-12T17:21:31","slug":"the-basics-to-renting-out-one-of-your-rooms","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/the-basics-to-renting-out-one-of-your-rooms","title":{"rendered":"The Basics to Renting Out One of Your Rooms"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you are lucky enough to have a spare room in your house <\/span><span data-preserver-spaces=\"true\">that is<\/span><span data-preserver-spaces=\"true\"> not filled with random junk, congratulations\u2014you may be sitting on some extra cash. The threat of a roommate eating your leftovers is not as high as the cash flow you can bring in, so let\u2019s dive into how to turn your extra room into extra revenue.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once you find a tenant, our friends from&nbsp;<a href=\"https:\/\/www.baselane.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Baselane<\/a>&nbsp;will be able to help you screen the tenant, help collect rent online, and mange all your rental finances with a business checking account and free bookkeeping software. This will save you 2-4 hours of work per unit per month.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Know Your Local Laws<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The first thing to understand if you are considering becoming a rent-by-room landlord is local laws. This is when you need to think like an intelligent landlord and purchase an additional landlord insurance policy on top of your homeowner\u2019s insurance.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you <\/span><span data-preserver-spaces=\"true\">are renting<\/span><span data-preserver-spaces=\"true\">, you will be subleasing if you bring on an additional renter. Each state and certain cities within states have their own rules around subletting. In Texas, a lease can state no subletting, but New York City cannot restrict this.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Secondly, you\u2019ll want to get familiar with your state\u2019s landlord-tenant laws (not exactly a beach read, but essential). Some places, like Washington, won\u2019t let you hand over the keys without a rental license and a home inspection first. They like to keep things official. In other areas, it\u2019s less about burdensome restrictions and more about nuanced conditions\u2014like ensuring the tenant has their way to get in without turning your living room into Grand Central Station.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Also, don\u2019t forget to review your local laws because leasing long-term isn\u2019t your only game in town. Thanks to Airbnb, you can play host to short-term guests, too.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Short-term rentals come with their own set of rules. <\/span><span data-preserver-spaces=\"true\">For instance<\/span><span data-preserver-spaces=\"true\">, in New York<\/span><span data-preserver-spaces=\"true\">, if you want to rent out a room for under 30 days, you\u2019ll need to be around\u2014so say goodbye to your dreams of renting out your place and jet-setting to Bali.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Check through these laws to make sure you comply with the appropriate regulations:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Local laws<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">City ordinances<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Zoning laws<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">State laws<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Homeowners association laws (if applicable)<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Some federal laws to be familiar with include:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Uniform Residential Landlord-Tenant Act<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Fair Housing Act<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Fair Credit Reporting Act<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Prepare the Space<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The room you are renting must be habitable and comply with health and building codes. Making the space ready should follow a consistent checklist, covering significant things such as:<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Privacy<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">You should add deadbolts to each room for maximum security and never leave any valuables out.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Maintenance<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Stay proactive on anything that needs to be repaired for the safety and functionality of the property.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Empty the room<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The room can\u2019t look like an episode of <\/span><em><span data-preserver-spaces=\"true\">Hoarders<\/span><\/em><span data-preserver-spaces=\"true\">. It should be <\/span><span data-preserver-spaces=\"true\">completely clear<\/span><span data-preserver-spaces=\"true\"> for the tenant coming in.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Sanitation<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Clean the entire room deeply and address any issues for cosmetic appeal.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you decide to furnish the room (most tenants will want this), inspect it with images of everything in <\/span><span data-preserver-spaces=\"true\">the room<\/span><span data-preserver-spaces=\"true\">. <\/span><span data-preserver-spaces=\"true\">The furnishings should be clean and comfortable, and I <\/span><span data-preserver-spaces=\"true\">would<\/span><span data-preserver-spaces=\"true\"> avoid buying very cheap furniture.<\/span><span data-preserver-spaces=\"true\"> It will break before you can even blink. When they are moving in, do a quick walk-through inspection and document the property.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">List It for Rent<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Now that you have the space ready, it is time to list it on the <\/span><span data-preserver-spaces=\"true\">major<\/span><span data-preserver-spaces=\"true\"> rental platforms. Zillow is the reigning champ in this department, but others like HotPads, Trulia, and more offer more eyeballs on your property. Social media and places like Facebook Marketplace, Instagram Reels, and TikTok are <\/span><span data-preserver-spaces=\"true\">extremely powerful<\/span><span data-preserver-spaces=\"true\">. Marketplace is for more than just your grandma\u2019s couch; fortunately, it is for investors.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Several things make your listing stand out compared to the competition, including:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Professional photos<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Detailed property descriptions<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Amenities available and nearby<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Any shared spaces inside<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Price<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Room size<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Parking&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Access to public transportation<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Pets and smoking policy<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Screen Potential Tenants<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">One of the easiest ways to regret ever starting this type of rental is when you overlook screening the potential tenant. While you won\u2019t be able to find out if this person snores louder than a train rolling in, there are a few key details to check for.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Credit score and history<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Any score over 630 is considered fair, over 690 is good, and over 720 is excellent. Ideally, a tenant with a good credit score won\u2019t want to mess that up.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Employment history<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Verify your potential tenant&#8217;s employment history, past and present. Call the listed employers to confirm the length of employment and their wages.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Background check<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Verify the tenant&#8217;s identity and criminal history. Understand the Fair Housing Act to know <\/span><span data-preserver-spaces=\"true\">the rules of<\/span><span data-preserver-spaces=\"true\"> what you can deny.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Check references<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A tenant should be able to provide rental history and the previous landlord\u2019s information. Call them and verify they were good tenants, paid on time, etc.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Luckily, <a href=\"https:\/\/www.baselane.com\/tenant-management\/\" target=\"_blank\" rel=\"noreferrer noopener\">Baselane tenant management tools<\/a> can screen potential renters precisely for this information. You can request tenant details and view reports in minutes, all online.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Signing the Lease<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A proper lease agreement will be the \u201claw of the land\u201d on your property and is extremely important when sharing common areas. Put everything that needs to be addressed in writing and have it signed by all parties. A real estate agent or attorney can help form a proper lease agreement to protect you. <\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Items to include in your lease are:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Lease term<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Rental rate<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Rent collection methods and dates<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Late rent fees and penalties<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Eviction clauses<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Amenities and utilities included<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Recycling and garbage collection<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Any policies or restrictions<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">You\u2019ll also want to define a few specific house-related things, such as the common areas and the house rules. This includes any shared areas, noise, overnight guests, pets, and anything else you could think of to help prevent conflict in the future. <\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Collecting a security deposit is a must and can help protect you financially if your renter decides to throw a raging party at the end of their lease when you just happen to be out of town.<\/span> <a href=\"https:\/\/www.baselane.com\/rent-collection\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span data-preserver-spaces=\"true\">Baselane online rent collection<\/span><\/a><span data-preserver-spaces=\"true\"> is one of the best ways to collect security deposits and rent payments. Don\u2019t get bogged down by the limitations of Zelle, Venmo, or Cashapp. <\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\"><strong>Tip:<\/strong> One thing to avoid is comingling your funds with your real estate rents and expenses. <\/span><span data-preserver-spaces=\"true\">It\u2019s best to open a separate business checking account <\/span><span data-preserver-spaces=\"true\">so you can<\/span><span data-preserver-spaces=\"true\"> keep all real estate funds separate, and <\/span><span data-preserver-spaces=\"true\">make sure to<\/span><span data-preserver-spaces=\"true\"> collect and hold your security deposit in a separate nonoperational account.<\/span><span data-preserver-spaces=\"true\"> Using Baselane\u2019s digital checking account allows you to do all those things in a few minutes while <\/span><span data-preserver-spaces=\"true\">giving you the opportunity<\/span><span data-preserver-spaces=\"true\"> to earn high APY on all your cash deposits.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">How to Evict Someone Renting a Room in Your House<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In most states, tenants renting just a room don\u2019t get the complete VIP legal and privacy treatment as those renting a whole property. The upside? It\u2019s a bit easier for owner-occupiers to let an unwanted guest go.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you need to evict someone renting a room in your house, you won\u2019t have to go through the entire dramatic eviction process that a typical landlord would endure. That said, every state has its own rules for this. Usually, you\u2019ll need to serve up a formal &#8220;notice to vacate&#8221; to your unwelcome housemate. You\u2019ll have to spell out when they need to pack up, and the notice period can\u2019t be shorter than their rent cycle. So, no surprise, last-minute &#8220;time to go!&#8221; sticky notes on the fridge.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Is Renting a Room Out Right for You?<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Renting out a room can be a great way to offset the cost of homeownership with either long-term or short-term renters. You can use your additional income to pay off your mortgage faster, travel more, or pad your emergency fund.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Some risks of living with another adult are apparent, like noise or conflicts over bathroom time. But there are also the not-so-obvious things, like assuming total financial liability for the lease, property damage, theft, or even evicting your tenant. <\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you follow the steps to manage risk and use a tool made for real estate investors like <a href=\"https:\/\/www.baselane.com\/\" target=\"_blank\" rel=\"noopener\">Baselane<\/a>, most situations won\u2019t turn sour, saving you money in the long run.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you are lucky enough to have a spare room in your house that is not filled with random junk, congratulations\u2014you may be sitting on some extra cash. The threat [&hellip;]<\/p>\n","protected":false},"author":613755,"featured_media":174572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7356],"tags":[],"class_list":["post-178759","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-house-hacking"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/178759","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613755"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=178759"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/178759\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/174572"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=178759"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=178759"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=178759"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}