American homes have been growing larger for decades. This trend is partly due to personal preference for more space, and partly caused by local laws mandating minimum square-footage of all new properties.
Owning and maintaining a home is a huge expense. Especially if you’re heating and maintaining parts of your home that you don’t really need.
As a result, a growing number of people are renting out parts of their home in various ways. From Airbnb to subletting, and all the way up to renting out their basement as a separate apartment, there are a number of ways you can earn money on your home.
The appeal is obvious. However, there are a number of factors you should consider before renting out part of your home. After all, your home is the place you and your family spend your days and nights, and sometimes the idea of having a stranger in your midst can be frightening to some homeowners.
For others, however, welcoming people into their home is a fun way to meet new people, help someone find affordable housing in a place they otherwise wouldn’t, and earn some extra money.
Know your local laws
It should be noted up front that not everyone can just legally rent out a portion of their home. Whether it is due to local laws, building code requirements, or homeowners association rules, there are a number of reasons you might not be able to rent out part of your home.
Before you consider listing a room or portion of your home, read up on the landlord-tenant laws in your area to make sure you’re comfortable with your legal obligations.
Make the necessary preparations
Renting a room in your home isn’t just a matter of giving someone the key to the front door. You’ll have to plan to install deadbolts, remove doorknobs with inside locking mechanisms, make repairs to the room and any amenities the tenant will have access to and document the state of your home.
Make a clear renter’s agreement
Would it make you uncomfortable to have a dog or cat in your home? Does your home have a smoking policy?
There are a number of things you should think about and add to your renter’s agreement and any online listing you post. This will help you narrow down your renter options and give you a better chance of finding someone right for your home.
Finding a tenant
There are a number of ways you can find people to live in your home. Most homeowners list their spare room or apartment online, but it can also be a good idea to reach out to people you know and trust.
Once you have interested parties, you might want to purchase a background check and determine if you’ll require certain documents (proof of income, credit score, etc.).
There’s a reason you have to do so much paperwork when you rent an apartment--the landlord wants to make sure they are covered in case anything goes wrong.
Before signing an agreement with your new renter, make sure it covers all of the “what-if” scenarios that could happen. There are several sample lease agreements online that you can use as a template.
Furthermore, once the tenant moves in, be sure that your discussions and agreements are documented. If the tenant denies you access to perform a check for pests, make sure you have some documentation that shows this denial.