You may not realize it but when you decide to rent out a room in your house, you’re more than just a roommate; you effectively become a landlord. While the rules and regulations regarding roommates can vary based on your location, it’s important to know the details of being a landlord in order to make your roommate situation as successful as possible. Without completely understanding your role, you could find yourself facing legal trouble.
Many of the lessons, tips, and procedures that work for professional landlords can be used in your own situation to make sure that you and your roommate are working together fairly and legally.
Things To Consider When Renting Out A Room
If you have unused or extra space in your home, renting out a room can be a great way to make some extra money. Whether you’re planning to rent an actual bedroom or an in-law unit, it’s important to remember that you’ll be sharing the property with another person – which may be problematic or frustrating from time to time.
Renting a room is different from subletting. Subletting is when you are a tenant at a property you don’t own and you rent some of the space out to someone else. With subletting, you’re still responsible for paying rent to a landlord. If you’re renting out a room in a property you own, your relationship is one of a landlord/tenant, rather than co-tenants.
Legally Renting Your Room Out
Even if you own the property, there can be conditions that affect whether you’re allowed to rent out a room. For example, if your property has a homeowner’s associations, they may prohibit additional occupants. Another thing to consider is that your city may have zoning laws that prevent you from renting out a room without a license or permit. Or, there could be restrictions on the number of unrelated occupants you can have at your property.
In some cases, there could even be certain conditions you’ll need to fulfill to be able to rent to someone else, such as independent outdoor access to the rental space or inspections. Be sure to check your local zoning laws, as well as state laws, city ordinances, and homeowner’s association bylaws, if applicable.
Renting Out a Room In Your Primary Residence
Once you know you can legally rent a room in your home, the next steps are preparing it for a roommate and marketing it. Here are some steps to take to take:
- Prepare the room
Ideally, the room or unit you’re renting will already be habitable, with electricity, heating, and accessible plumbing. If you have more than one bathroom, make sure to decide which one will be assigned to the tenant. Tenants have a legal right to privacy, so you may also want to think about installing a lock on their bedroom door so they can feel secure about their belongings when they’re not home. Doing these things will help you stay compliant with landlord-tenant laws.
Many renters are interested in finding a room that’s already furnished; if you decide to offer furnishings, make sure to take an inventory of what belongs to you. You’ll also want to complete a walkthrough inspection with the tenant before they sign the lease. One easy way to inventory your items is to take photos of everything. This will also help to document the condition of the room before the tenant moves in.
- Marketing your room
Before you begin marketing your room, think about who would be your ideal roommate. Are you interested in living with a student? A retiree? Someone who’s a fellow animal lover? Come up with a list of criteria you’re looking for, but do make sure to be aware of Fair Housing Laws.
Federal Fair Housing Laws do allow some exceptions to traditional protected classes when it pertains to choosing a roommate. The laws state that you’re not allowed to use discriminatory language in your rental advertisement, which would typically include gender. However, it’s fine to include a gender preference in your ad, as long as no other qualifiers are added. This means if you’re a female and would like a female roommate, you can state this, but you’re not allowed to specify race, religion, sexual orientation, etc.
In 2012, the 9th Circuit Court ruled that applying a nondiscrimination requirement to homeowners or a tenant’s roommate selection would be an invasion of privacy; therefore, the anti-discrimination provisions of the laws don’t apply. This is because choosing a roommate increases your personal risk and affects your quality of life.
Listing your room for rent
After you’ve made sure the rental space is ready and decided what type of roommate you’re looking for, you can start advertising your room. There may be places that renters might not look, so it’s best to have your listing in several locations.
If you’re considering a single person looking for a room, you may want to put flyers up near a college campus or a senior center. Think about where your target tenants may be spending time, rather than casting a wider net. You can also ask your friends or family if they know of anyone looking for housing. This gives you the added benefit of finding someone who’s essentially in your network and not a complete stranger.
Regardless of how you find your roommate, you should always conduct some form of tenant screening, such as a credit check and background check. This can save you a lot of time and hassle down the road! It also gives you the added assurance that the person you’ve chosen is likely to be a responsible, stable renter. In combination with screening, be sure to also ask the applicant for references from past roommates. References from landlords work too, but talking to someone who actually lived with the person will give you a much better idea of how they will be to live with.
Screening your roommate
If you’re sharing your home with someone, it’s very important to choose someone who will be a good renter. Not only so you can feel confident they’ll pay their rent, but also because issues of any kind can become amplified when you’re living with other people. To protect yourself legally, and conduct screening properly, you should have a compliant rental application that grants you, as the landlord, permission to conduct screening and contact their references. Once they’ve filled this out and agreed to the terms, you run your background and credit checks. Our RentalConnect service is a great option, as it allows you to defer the cost of the screenings onto the applicant.
Writing your lease agreement
Before you select an applicant, you should also make sure to create a lease agreement. Although it may not seem necessary, having a lease agreement in place will give you added protection and outline the expectations of both the tenant and you as the landlord. Some states accept oral rental agreements, however, you should always have everything in writing, with a signature from both parties. A lease agreement will help you both navigate what to do if any issues arise. Learn more about how to write an iron-clad lease here.
In addition to the terms on a typical lease agreement, here are a few things to include for roommate situations:
- The length of time the occupancy will cover. Most lease agreements are typically one year, but if you’re renting to a student you may want to consider a 9 to 10-month period to correlate with the school year.
- Define the common areas. Shared spaces can often lead to conflict, especially if no guidelines are provided in the beginning. Unless they’re going to live in an in-law unit, your tenant will need to have access to parts of your home, like the kitchen, living room, and laundry room. Parking and the use of the backyard also fall into common areas, so make sure to clearly specify your usage rules and whether any areas are off-limits.
- Utilities. Another thing you’ll need to decide is how to split utilities, which should also be clearly outlined on the lease. For convenience, you may want to add their portion of the utilities into the cost of rent or simply split the costs of utilities down the middle. Another option is to have the tenant be solely responsible for a single utility.
- House rules. Clearly state your expectations for your tenant’s behavior, especially regarding things like noise, overnight guests, pets, vacations, smoking, and household chores. This will help to eliminate any gray areas or issues that can pop up over time. Give your tenant a copy of the rules so they can refer to it over time.
- Rent and deposit. Have your rent rate, due date, and security deposit clearly stated in the lease, as well as the penalty for late rent. If you do end up having an issue with the tenant not paying their rent, keep in mind that you can evict them as you would if you were renting a separate property to them. However, you’re also required to follow rules and regulations about official rental notices, maintenance, and security deposits.
Keep in mind that any money you receive from rent is considered taxable income, although you will be able to claim expenses and deductions that wouldn’t be applicable without a roommate. This includes things like replacing old carpet in the rented room or painting it.
If you’re renting a room in your house, the best practice is to determine the square footage of it and the percentage of your house it takes up. So, if you have 2,500 sq. foot home and the rented room is 500 sq. feet, the room would be 20% of your total square footage. This means your tenant would be responsible for 1/5 of mortgage interest, utilities, or real estate taxes.
Treat it like a business
Ultimately, the best way to ensure success when renting out your room is to treat it like a business. Even though you’re not a rental housing professional, you should still make use of all the rental tools and processes available to you. Things like written lease agreements, inspections, maintenance, dealing with money, and evictions are a part of being a landlord, regardless of whether you’re renting a room of your own home or renting a separate property. By following these guidelines, you’ll be prepared to rent out your room as successfully as possible.
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