Sometimes you get to a point where you are ready to earn some additional income. Whether you want to help pay off your mortgage or finance an expensive vacation getaway, renting a room in your home is a viable way to bring in a little extra cash. But sacrificing your solitude means you may have to adjust your lifestyle and set boundaries. Understanding the pros and cons of putting up a room in your house for rent will help you make the best choice—befitting your daily life, meeting your financial needs, and accommodating your potential tenant.
What Does it Mean to Rent a Room in Your House?
Renting out a spare room in your home can be a lucrative side hustle if you want to earn extra money. Any room in your abode is fair game, from your child’s old bedroom to the renovated space in the attic to the converted garage unit with the barn doors. It’s your home, so it is your choice. But regardless of which room you rent out, understand you may have to share—like the bathroom, kitchen, or even outdoor space.
There is no guarantee you will find the perfect fairytale renter. No matter how well you vet them, sometimes you and your tenant may not see everything eye-to-eye. While the additional money is always a nice perk, you will need to decide if sharing your home with someone else is worth it.
Keep in mind renting out a room in your home is like any other landlord-tenant relationship, except you occupy the same property as your renter. This tenancy differs from subletting when a tenant rents out their space (sublets) to someone else, while still being liable for their subletter and their landlord’s monthly rent payments.
Is It Legal to Rent a Spare Room in Your House?
In general, it is legal for you to rent out a room in your home. However, various factors can impact your ability to earn additional income in this way. For instance, a condominium homeowners association may prohibit additional tenants unless they are your family members. Even some municipalities have regulations to restrict you from renting a spare room in your home unless you have a license or permit. Some laws require a room to have a door to the outdoors or even a professional inspection.
Laws vary across the nation, so you will need to review the rules that govern your specific area, including:
- homeowners’ association rules (if applicable)
- neighborhood association bylaws
- local laws
- zoning laws
- city ordinances
- state rental laws
- federal housing laws
Staying in compliance with these regulations ensures you stay out of unnecessary and costly legal trouble.
Pros and Cons of Renting a Room in Your House
No rose-tinted glasses can shield you from the reality you may face by renting out a spare room in your home. There are benefits and downsides you should know about if you want to make the most informed decision.
Pro: Increased rental income
It’s hard to go wrong with extra money in your pocket. Renting a spare room is one of the easiest ways to earn additional income because it is a passive revenue source. You earn money passively, making residual income a viable step toward achieving true financial freedom.
Pro: Shorter rental vacancy times
Rental spaces that sit vacantly bring no money in your pocket. If you decide to rent out a room, you’ll want to maximize your profits by filling that space sooner rather than later. Luckily, spare rooms can be easier to rent because they are more affordable and require less upkeep than an entire apartment or home.
Pro: Individualized contracts
No two tenants are alike, so a personalized lease agreement is ideal. Whether you decide to rent your spare room to a disabled person or a dog owner, the clauses you include in the agreement will differ. Individualized contracts make it easier for you to set tenant-specific expectations, reach a more diverse pool of candidates, and fill your vacancy faster.
Pro: You may qualify for a significant tax break
The number one goal of tax season is to get back as much money as possible. Property owners may have access to unique tax deductions for renting out a room in their home. However, rules vary nationwide, so research your local laws to determine which regulations apply to you.
Con: Rental income is taxable income
There is a common misconception that rental payments are free money for the landlord. In truth, any rent you collect is taxable, and any attempts to undermine or bypass those tax requirements are unlawful. Less rental income is never ideal, as it means you will have less money to cover expenses like repairs, utilities, cleaning, insurance, and maintenance.
Con: Tenants may damage your property
Whether you’re renting out a spare room or the entire home, there is always the chance your tenant(s) may damage your property. Situations like this are never fun and can be costly to fix. Whether they scuff the walls or scratch your newly polished hardwood floors, you will need to resolve yourself for these possibilities.
Con: Renters may refuse to leave
It almost seems like an impossible situation to imagine, but sometimes your renter may refuse to pay their rent or even leave. If this happens, you can’t use a self-help eviction because it is unlawful in most states and can get you into serious legal trouble. Instead, you will have to file an official eviction with the courts, which can be costly and time-consuming.
Con: You might accidentally break the law
Even as the most accommodating landlord, legal accidents can occur if you don’t carefully manage your landlord-tenant relationship. Here are some key issues that can cause you trouble:
- Not providing a safe and habitable home
- Not going about the eviction process legally
- Renting out a room with mold can harm the tenant’s health
- Violating your local and state housing codes
- Charging an excessive security deposit
- Denying a tenant with a service animal without probable or legal cause
- Not providing adequate heating and cooling
There is no guarantee of what might happen if you make these mistakes. Maybe the tenant will leave, or they will sue you in court in the worst case. Avoid these situations by researching and adhering to your local and landlord-tenant laws.
How to Rent a Room in Your House
If you decide you want to rent out a spare room in your home, follow these six steps to do it properly.
1. Check the legal conditions
Remember landlord-renter laws vary from state to state. To comply with your local laws, review the regulations for your specific area and then adjust your plans accordingly.
2. Prepare the spare room
Now that you have checked your local rental laws, you are ready to prepare the extra room for occupancy. The goal is to get it “move-in ready.” To do this, refer to these tips:
- Prepare the essential furniture, bed, nightstand, lamps, dresser, desk, etc.
- Provide clean and comfortable bedding and linens.
- Make sure to declutter, dust, and clean the room thoroughly.
- Free up storage space in the tenant’s closet.
3. Consider the Fair Housing Act
To avoid subconscious discriminatory behavior, refer to the Fair Housing Act, which protects individuals against housing discrimination based on:
- Race
- Color
- National origin
- Religion
- Sex (sexual orientation and gender identity)
- Familial status
- Disability
Also, be mindful that you cannot discriminate against renters who have a service animal. Even if you don’t allow pets, service animals are not considered pets by law and would not fall under any pet policies you might have in place. Refer to the Americans with Disabilities Act (ADA) for more information about service animals.
4. Advertise your spare room
After preparing the room, you can start advertising your room for rent to potential tenants. Describe the amenities, the price, and any fundamental rules applicants need to know. Use high-quality pictures to showcase the beauty of the room and the entire home. There are many ways you can market your spare room, such as:
- Putting up a room-for-rent sign on the lawn.
- Advertising on online rental service websites.
- Putting an ad in the local newspaper.
- Putting up flyers around your town.
- Advertising on social media platforms.
5. Write a lease agreement
Whether you have one or several spare rooms to rent out, write a lease agreement before you start reviewing applications. The legal document should cover all the essential rules and regulations you and your tenant(s) must adhere to for the contract duration. With Apartments.com, you can easily create a lease that fits your property and your standards. Our fully customizable lease agreements are state-specific and legally binding, meaning you can create a lease no matter where your property is located, and it will adhere to all state laws and local ordinances. Once your lease is created, your tenants can quickly sign online. No more hand-delivering paper leases and then trying to find a place to store them! Apartments.com keeps all your leases neatly organized and accessible so you can reference them whenever you like
6. Screen potential roommates
Once you have written the lease agreement, you can start screening potential roommates for your spare room. You should conduct a credit report and background check, as the results can help to inform your decision-making. Apartments.com makes it easy to screen tenants, get the information you need, and find a qualified renter fast. Unlike our competitors, who use various third-party resources to collect information, we partner with TransUnion to provide you with screening reports for evictions, credit, and criminal history.
Differences Between Short-Term vs. Long-Term Renters
Short-term and long-term renters may provide you with a different experience as a landlord. Depending on your lifestyle, you may prefer to attract one over the other. Here are some of the key differences you need to know:
- Short-term renters only rent your room for brief periods, often one or two weeks at a time. It’s ideal for vacationers or business professionals looking for a more affordable hotel alternative.
- Long-term renters often want to stay anywhere from six months to several years.
- Short-term renters usually provide one payment to cover the entire duration of their stay.
- Long-term renters provide a consistent source of income over time.
- Short-term renters may be ideal for new landlords because they can use the experience to determine if turning their spare room into a long-term rental is right for them.
- Long-term renters are convenient since you won’t have to conduct screenings repeatedly like you would with short-term renters who come in and out of your home.
- Short-term renters provide short-term profit, so you need more of them to match what you will make from one long-term renter.
- Long-term renters stick around for a while, making it easier for you to form a personal relationship with them. However, you will need to set clear boundaries to ensure the landlord-renter relationship remains cooperative and healthy.
Frequently Asked Questions
Should I rent out the spare room in my house?
Whether it’s a good idea to rent out a spare room in your own home depends on your specific needs. You must weigh the pros and cons to determine if it is right for you. If you want additional income and are willing to share a space with a tenant, then good news, go for it! If the cons seem too risky, it may be best to find another source of extra income
What can I do to protect myself when renting out a spare room?
The best way to protect your property is to get insurance. Aside from homeowners and landlord insurance, additional insurance is available to cover you in a problematic situation. You might also require your tenant to get renters insurance to cover their personal belongings
How much should I charge to rent out a spare room?
As the landlord, you can charge however much you want. But keep in mind tenants may seek out more affordable units that offer better amenities. Since you are only renting out a room, review similar local listings to help you determine a fair rental price for your area. You can also work directly with a prospective tenant to set a rental payment that is reasonable for them and profitable for you
Can you rent out a spare room in a single-family home?
If you live in your single-family home with your tenant, it is usually acceptable for you to rent out a spare room. However, if it is a non-owner-occupied single-family home, you should check your local laws to see if you can rent out individual rooms. Some municipalities restrict how many people can occupy a home, or they may require you to register your property as a boarding house.
What are some tips for renting out a spare room in my house?
Here are some essential tips to consider if you want to rent a spare room in your home successfully:
- Get the necessary insurance
- Review your local and state rental laws
- Make the spare room move-in ready
- Choose a rent price that is profitable and fair
- Upload a high-quality room-for-rent advertisement
- Create and deliver a rental application to interested renters
- Always conduct a thorough credit and background check
- Write a comprehensive rental agreement
- File your documents for tax season
Can I rent a spare room to a friend?
Technically, you can rent out a spare room in your house to a friend, but you should probably set clear boundaries. You want to preserve the friendship while still letting your friend-renter know you have house rules they must follow. Finding the balance in fulfilling your role as their landlord and friend is ideal for a harmonious personal and business relationship.
