Do you own a sizable home with one or more unused rooms? Are you an empty-nester? Maybe you’re a little lonely and could use some company? Depending on the amount of available living space in your place of residence, the unused space in your home might make for a great additional source of income. However, before you consider renting out a room in your home, there are some important points to consider.
It’s vital you remember that you will not become a typical landlord. Generally, landlords own rental properties that they don’t live in themselves. You will need to consider factors about your renter that speak to your comfort level in sharing your living space such as selecting your tenant referencing provider and rent guarantee insurance. There are also legal particulars to keep in mind. Let’s take a deeper look.
Here are five tips for renting out a room in your home:
Learn the law
What legal steps must be taken? Renting a room in your home isn’t as simple as offering someone a place to stay for a fee each month. It’s imperative you research the law in your province. In some areas, zoning laws restrict homeowners from renting rooms to people outside their family. To do so, they require a permit or a license. Additionally, there may be restrictions on the number of non-family members you can rent a space in your home to.
In some municipalities, homeowners are required to get inspections before renting out rooms. In addition, it’s important to ensure that your rental space is in compliance with local laws, city ordinances and zoning laws.
Prepare your room for the tenant
Yes, it’s your property. But once you decide to rent a room to a tenant, you must remember that the space is his/her private living area. With this in mind, you may wish to put a lock on the bedroom door. This will ensure any potential renter confidently knows their privacy will be guaranteed. In addition, your renter will take comfort in knowing their personal belongings will be secure when they are not home.
You’ll also need to decide if you wish to rent out an empty room that can be furnished by its inhabitant. Alternatively, you may rent out an already furnished room. Either way it’s important that you take a detailed inventory and both you and your new roommate do a complete walkthrough inspection before signing the lease agreement.
Set aside an emergency fund
You never know what can happen when you rent out a room in your home. You may have a particular vision of how to maintain the living quarters and it may differ with that of your tenant. It’s wise to ensure that you have some money put away for emergencies, repairs and potential damages. By renting out a room in your home, you’ll secure additional income, but can you be assured that it will be enough to cover the cost of potential repairs?
Having an emergency fund is important and ensuring you and your renter are on the same page prior to the arrangement may save you from dipping into that fund. Samantha Brookes, founder and CEO of Mortgages of Canada, encourages landlords to have specific rules in place prior to moving forward with any living arrangement.
“Renting out part of your home should be seen more as a business deal then a simple rental agreement,” she writes in a HuffPost article, “Always have written and signed documentation to cover all your bases. This ensures liability on both your end and your renters’.”
Educate yourself on eviction proceedings
No one likes to think of worst-case scenarios. But it’s an integral part of initiating a landlord/tenant arrangement. What do you do in the unfortunate event that you need to evict your tenant? On Investopedia.com, Amy Fontinelle reminds us that our lives are constantly changing. What if you decide to have children? What if your parents need to live with you? She also points out that your tenant may find themselves in a situation where they can no longer pay the rent. Be sure to understand eviction laws.
“Eviction laws are strict, and landlords must follow them exactly for an eviction case to stand up in court,” warns Fontinelle, “Proceedings can be time-consuming and costly—you may have to hire a lawyer.”
Screen your tenants
Obviously, you don’t want to rent a room to just anybody. How can you be sure your potential renter is the right fit? Given that you will be living with this person, it is in your best interest to determine that they do not not have a criminal record. It is also important that your potential renter has a good credit history so you can confidently count on them to pay their share of the rent! With the SingleKey credit and background check you can get a comprehensive tenant report in minutes. It includes a background check, credit report, employment history, past addresses, eviction history and a criminal record check so you can make sure you have a safe and reliable renter!