Renting out extra bedrooms in your own personal house.

12 Replies

So I bought myself a 3 bed 2 bath 1200 sq ft house in the beginning of this year, but It is just me in the house since I live alone. I've been looking at ways to save money so that I can build up my capital, and I came up with the idea to possibly rent out the spare 2 bedrooms in my house. Now, I am hesitant on the idea of inviting complete strangers to live in the same house that I do (obvious reasons there), but I can't argue with the numbers and financial sense that it would make. I also live in what would be considered a "low-income area" and although my house is pretty nice considering most houses in the area, I'm still worried about how I would even find decent tenants for the area that I am in. Has anyone ever considered renting out their additional bedrooms in their own home before? Has anyone actually done it? How did it go for you? Was there anything that you wish you had done or not done that would have made it a better experience? Any feedback or advice that ANYONE has would be extremely appreciated! I'm very open-minded to alternative ideas as well! 🤗 Thank you so much!

@Isaiah Williams are you thinking of doing it via Airbnb or VRBO or are you talking more long term rental? If long term, I'd treat it just like any other rental and do a thorough screening. The tenant screening offered through this site is one of the best I've found. If you are doing short term vacation rentals then I'd first start with checking into local regulations to make sure the city (or HOA if you are in one) allows that. Then do a ton of research both on this site and places like YouTube which has great videos on setting up STR's and what you need to do in order to get good reviews.

@Robin Searle Thanks for the comment! I was thinking a bit more long term wise; 3 Month possibly 4 month leases. There was a couple things I forgot to add earlier in my original post. I work 12-hour shifts 5 days a week and also am busy with other things for, so I'm typically out of my house by 5:00 a.m. and I don't stumble back into the house until 8:30 p.m-9 ish where I usually cook a little bit to eat and then fall asleep . Even on my off days I'm running around town taking care of errands all day and I am hardly at my house the entire day because of that. Every other weekend I'm a ctually not inside my house at all because I go out of town too spend time with my son, to whom the mother has custody of and I have visitation rights. What I want to do more than anything is just rent the entire house out to somebody, and then buy myself duplex or other small multifamily property to house hack in. Unfortunately this house I bought was in an FHA loan and as far as I understand it, I cannot legally rent out the house since FHA Loans are for owner-occupant only. Would you happen to have any suggestions on what I can do in my situation?

@Isaiah Williams I'm not a lender or an attorney so please verify this - what I've been told by the lenders I work with is that FHA requires owner occupancy for one year and after that you can rent it (again - please verify as this is what I've been "told"). You wouldn't be able to use another FHA loan to buy a second property while you had an outstanding FHA loan so you might consider refinancing. Conventional now has some lower down payment loans as well. If you end up just staying in your house, I'd just find a full time roommate - maybe a local college student. I think you'll find it hard to rent to someone for 3-4 months at a time.

Sounds like a perfect Airbnb situation.  You get money on the weekends that you won't be there, don't have the hassle of roommates and, god forbid, late payments/evictions.  Plus, with Airbnb you wouldn't run afoul of the 1 year requirement, which you might if you left and rented the whole house.  You make more per day from AirBNB than renting so even though it's not rented all the time, it still might be close in terms of what you get vs what you give up. 

@Isaiah Williams I used to rent rooms out in my personal home. One big thing I learned is that it's much better to only do month-to-month leases. This way, if your roommate is not a good match for you, but they're doing nothing that violates your lease, you can just give them the 30 (or 60 day if that's what your location requires) notice to vacate immediately. If you have a longer lease, you'll be committed to dealing with that situation unless you can get them to agree to move out sooner.

In our leases for the extra room(s) in the house, we made sure to spell out everything such as what was common space and what wasn't. Where they could park. How utilities were split. For example, our tenants had no access to the garage nor could they park in our driveway. Street parking only (we had exceptions when unloading lots of stuff from their car of course).

You want them to be clear on what they must keep clean. Their bedroom of course. If they have their own bathroom, it needs to be kept clean. The bathroom my housemates used was also the guest bathroom and I expected my guests to not be disgusted when they came over. I also would ask they they help me keep the kitchen clean.

We advertised on Craigslist and roommates.com and at work. If you're in a dicey neighborhood, I highly recommend you screen as you would any tenant. Also when they come to see the place, be sure to chat with the person to get a feel for what they're like. Do they seem relaxed and flexible? Do they seem picky? You want to like the person you share your house with.

Don't be afraid to decline people. Being this is your personal home, you can safely be a little more picky. I had a military guy who wanted me to add quiet hours and laundry hours to the lease. I determined we were not a good fit for eachother and kindly suggested he might be happier elsewhere. While I'm not loud, I also don't want to feel like I"m on eggshells in my own house. And laundry hours is just silly to me when we're all adults.

Hope this helps!

To add, yes, you can rent out a bedroom or 2 on day 1 of your purchase even if it's FHA because *you* are living in the property. You don't even need to mention that you're renting rooms. You'll just make them suspicious. If you're just renting rooms out in your primary residence, that is your own (and the tax man's) business. No one else's.

We rented a room in our personal home from day 1 (and recently stopped a couple of years ago).

@Robin Searle Thats excellent advice! I've considered that and if I do end up doing this, I would probably prefer a college student. I've heard about that FHA rule as well, but I haven't been able to confirm it yet. Ive tried googling it and talking to my real estate agent as well, but neither one really gave a 100% certain answer. If I'm able to actually rent it out after I've lived in my house for a year then That would be AWESOME! 😀 still have a few more months to go before then though.
@Peter Sanchez I've heard a lot of people speak about Airbnb, but I must be honest.... Beyond it making your home a hotel of sorts, I don't really understand what it is. Definitely would have to be something I need to do my research on, but I'm always open to any ideas!
@Nicole A. That actually helped me a tremendous amount thank you so much!!! I have played around in my head and on paper different rules and guidelines to follow if I would actually have someone renting out a room, but Im kind of lost on how exactly I would out that in a contract? I've never rented or anything like that, I'm just beginning my real estate journey, and I don't even know where to go to find out things like the laws and rules of renting or where I can file contracts. I'm assuming I would need a lawyer though? 🤔 When you rented out your extra bedrooms, did you have to report the income from them on your tax return forms? Also what worked better for you, a set fixed price for utilities every month, or simply splitting the bill (ex: half and half) when it came? Thank you again so much for your fantastic bit of advice!

@Isaiah Williams You're welcome! The contract/lease can be any standard lease for your state so that it reflects your area's laws, and then you can just add to it as you see fit to reflect things like how utilities are split, parking, etc. You can probably find this online. You can definitely find it here on BiggerPockets because we have the lease templates for most states by now. I think it's free to PRO members but for purchase to other members. Just take a peek around for it. You could have an attorney draft it up but probably no need being there are likely templates out there already for you. These templates are typically for an entire property, so you can just edit it to clearly reflect the person is renting a room and you can define common areas too if you'd like (such as kitchen, living room, etc). 

We personally split the utilities by the number of people living in the house. So some bills were paid after the fact of course...but you just provide a copy so they can see how you came up with the numbers.

@Nicole A. I actually am a pro member and I just found those forms you are talking about. Incredibly useful. I think I'm on the right track going forth thank you so so SOOO much! You've been absolutely amazing. 🤗🤠