Renting your home or renting a room in your home can be a great way to save for retirement, gain financial freedom, or help pay off your mortgage. In today’s hot rental market, many renters are happy to share a space and have a roommate in the hopes of a lower monthly rental fee. If you are thinking about renting out your home, especially if you are considering sharing communal space with a renter, here are some things you should know before you make the leap.
Understand The Legalities
While some states are more lenient than others, all states have rules and regulations in relation to landlord-tenant laws. Ensure you fully understand your state’s laws and requirements for landlords. While you may have less stringent rules if you are renting out a portion of the home in which you reside, you are still responsible for maintaining a habitable environment for your tenant.
Each state and municipality has different rules. Here are a few considerations to research or consult with a real estate lawyer in your area:
- Research the legal eviction process if you and your tenant don’t mix
- Identify the tax implications of renting your home
- Check with your insurance to understand how having a tenant affects your coverage
Thoroughly Screen Applicants
Renting out a room is an interesting scenario because you are not only dealing with the dynamics of having a new roommate, but you are essentially becoming a DIY landlord. Tenant screening is vital under any rental situation, but if you are renting out a portion of your home to share with a new renter, screening is more imperative than ever before. Utilize a tenant screening service to complete a background check, credit check and criminal record check. Arrange a meeting in person with your applicants to establish ground rules and ensure a good mix of personalities from the get-go. Additionally, it can be helpful to write out a list of qualifications you have for your ideal future roommate and renter. This can help you narrow down applicants in a fair and unbiased manner.
Decide on Your Policies
From a pet policy, to regulations on guests, to how to pay rent each month, you will have to determine the best policies for you and your renters. Be sure that you evaluate and decide on these potential rules in advance. You will need to specify any policies in your lease agreement. Many templates are available online that can get you started. 2 protect yourself fully, it is best practice to create your lease and then consult with a lawyer to ensure that there is nothing you have missed.
