Do I need a contract to house hack?

Question

I’ve been fighting the urge to do this. I live in a three bedroom townhouse alone. I have two sizable rooms that I’m now strongly considering to rent out. Only problem is, I don’t wanna share my space, but I could use the extra income to help me reach long term real estate goals. So if I do this, I gotta do it right. So my question is, do I need a contract for this? What kind of contract could I use? Should I require a security deposit? How do I go about checking their background?

Andrew B. · Answer

You don't have to use a written contract, because acceptance of rent constitutes a legally binding, oral agreement between you and the tenant. This oral lease does not provide any protection to you outside of what your state laws say is legal or illegal.

Now, just because you can, does not mean that's optimal. The correct way to do this is to get lease written by an attorney who specializes in real estate in your state. This insures the lease provides proper protection to you and is in compliance with state law.

Your questions make me think you don't really know much about what you are doing. By renting out a room in your house, you are providing housing to someone. This should not be taken lightly as there are many laws surrounding housing and protecting those who utilize it. Since you live in the house, the rules will be slightly more lax but you will still be at the mercy of state laws. For example, if the tenant does not pay rent and you change the locks to kick her out, you go to jail. You must formally evict them.

I suggest you spend some time on this site. Read the blogs and the forums and try to learn your state laws and how they effect landlords. You should be able to google them. Being a landlord is a business...treat it like one.

Caleb Heimsoth · Answer

@Dorian Dixon yes, yes and yes.  Do all the above.  There are background checking services that do this for you.