Tips for Renting Out a Room in Your Home

To combat high bills and lower wages, many homeowners are turning to the extra office, basement, or their child's old nursery to make up the difference. At the same time, there are others who don't need a lot of space or who are just getting started on their own that are taking advantage of the cost efficiency of sharing someone's home. No matter what your reasons are for renting space in your home, here are some helpful tips.

Price - Price is one of the biggest factors that someone shopping for a room is looking for. It is key to make sure that your room is priced right. To find the average price in your area, look around on websites such as roommates.com or craigslist.com and see what other rooms are going for. You will also need to know if you are going to include utilities or not. Some advertised rooms do include utilities and for others it is extra and is split between roommates. You can't always cut the bills down the middle. If you have a high mortgage, expecting a roommate to pay half if they only rent the basement isn't reasonable. Think about what they are getting and what is fair.

Wall Color - Go with something neutral. It will appeal to the majority and is the most flexible when tenants move in and out frequently. You are less likely to make tenants want to repaint and if you are renting to either gender then it will appeal to both. Keep the color sample or color name so that fixing nail holes and scratches is easy after they move out.

What's included - I find it best to include utilities in the rent. Renting a room usually appeals most to college age adults. This group finds it easiest to only have to pay one bill. Also, this will probably be the easiest for you. You will continue to pay bills as usual, but you get a lump sum for everything at the beginning of the month. It is up to you to budget and continue to pay the bills on time. It is easier than having to split each bill of each month and then collect each bill separately. You should include gas, electric, water, and sewer no matter what. To get more possibilities, include cable and wireless internet.

Current tenants - Potential tenants would be interested in who they will be living with. Often times they will want the same age range and maybe the same gender. Provide this information about yourself and anyone else in the house in your advertisement to avoid unnecessary inquiries. Also include any current pets in your home. People may have allergies or would not to live with a dog or cat. Do not make any discriminatory preferences in regards to your future roommate. In a shared housing environment, the only preference you can express is gender. For more information, please read the Fair Housing Act.

Rules -Think about what you would and what you wouldn't want people in your house doing. If you enjoy your sleep you may want to consider "quiet hours" or rules about guests. Other rules you need to set are regarding pets, smoking, and use of common areas. Make sure to include smoking, anything illegal, and pets in the lease. For other rules, like use of laundry facilities, quiet hours, and breakdown of shared chores, you may want a list of rules to be signed separate from the lease. Include a clause that rules are subject to change.

Lease - There are pre-made leases available to buy at office supply stores or online. There are also computer programs and kits to make a more customized lease. I recommend researching your state laws before writing a lease. Look and see if there is a low cost legal agency that could give basic advice and assistance in writing the lease. It is very important to make sure that everything is covered and that it is worded correctly. Both the landlord and tenant need to sign the lease. Make sure that both parties have a copy.
What your house has to offer - When advertising your room for rent, be sure to highlight what's great about your house. Does it have large rooms? Fenced in backyard? These things make your house stand out and when there are many comparable prices it can give you the edge to find a good roommate. Be sure to highlight if you have cable, washer & dryer, dishwasher, central air, balcony, off street parking/garage, private bathroom, large closets, private entrance, nice neighborhood, bus lines, game/theatre rooms, etc.

Where to advertise - Post online at craigslist.com and roommates.com, get permission to put up flyers at local colleges, and put up flyers at grocery stores, post offices, or libraries. If you want to further advertise, it is always good to put an ad in the local newspapers.

Collecting Rent - You will need to outline in the lease how much rent is for and how often it is due. Usually, this is monthly, but some tenants like to pay weekly or bi-weekly. You can decide what forms of payment you will accept and if not paid on time, what the penalty is. An example may be $25 fee if the rent is more than 5 days late. Again, these rules need to be included in the lease. Buy a receipt book and give receipts for any money collected. Keep the copy and make records of when rent was collected. If you set a deposit, be sure to keep it in a separate account and not to touch it. Also, give a receipt for the deposit and include the terms of the deposit refund in the lease.

Though the first time renting out a room may be scary, it can be a great opportunity. You are likely to make new friends, be less lonely, get to share in cooking/cleaning, and most of all have less financial hardships. Do plenty of research and be careful in choosing your roommate and the process should go smoothly.