Good Afternoon BPF,
I was approached today by a friend of mine who would like to rent out a room in my home. My question to the group is, what is the best way to do this and cover myself. Is this the same as leasing the entire house? Do I need to make a change on my insurance and provide them a room rental lease? Thank you in advance.
Good afternoon troy, i don't think you need to change your insurance. i would just provide them with a simple lease agreement for the terms you both agree on.
Thanks for getting back to me. He is going to be a two-year-old coming along with the adult. God forbid anything happened to them at the house. Just making sure I have all the proper coverage.
you could make him get renters insurance but i am not sure how that would work with him just renting a room. i would call up your insurance and see what potential options you could take.
Overall it's similar process to renting a house with on boarding tenants. Have a lease.
Since they will be sharing common area space, have some extra sentences in the lease for keeping common areas clean / clutter free, quiet hours, etc. Just set the expectations up front before they move in!
Put all your disclaimers/expectations on the lease.
If you're open to it, it seems like a win-win. They get a good place to stay, you get some extra cash in your pocket. It's not exactly what you're doing, but we have a lot of house hacking clients in Denver and Colorado Springs who rent by the room. What I see as important is:
- You will need extra coverage. I'd reach out to Proper Insurance. They specialize in Airbnb and vacation rental insurance, but they also have a home-sharing policy. It might be a touch more expensive, but be smart with the risk. Pay a little to get more in rent.
- Be sure the lease addresses how common area damage, common expenses (like toilet paper, dish soap, etc.), and common utilities will be covered.
Definitely change up your insurance and ask that your friend get renter's insurance, as well. Friends are friends until money or things cause feelings to get hurt. Having something objective between you will help to smooth things out, if things go sideways. Tell your friend that you're protecting everyone.
As mentioned above, I would highly recommend renters insurance for the room mate. There is a good chance that your policy won't cover his belongings. If something happened to the house that resulted in his stuff being lost or damaged, he may expect you to cover this even if you are on good terms. I moved in with a friend for a while and asked my insurance agent specifically about this and he wrote me a renters insurance policy to cover my belonging for really cheap.