Dos and Don’ts of renting out a room in your home

a sign that has "rooms for rent, ask here" written on it, indicating a room being rented out.

Dos and Don’ts When Renting Out Space

We have often suggested renting out space in one’s home as a strategy for increasing income and cutting housing expenses. Naturally, this is much easier said than done, so we’ve been offering some posts about what goes into renting out part of your house.

Do understand your rights and obligations

You should talk to an HUD-approved housing counselor to understand everything that will be required of you as a landlord, and how to protect yourself if the rental relationship goes bad.

Don't discriminate when reviewing applicants

You can break the law by asking inappropriate questions. You can’t discriminate because of race, religion, gender, sexual orientation, family status, disability, or age. Best to avoid bringing these subjects up when interviewing applicants.

Do treat being a landlord as a business

This is a source of income, so it should be treated as seriously as any other job you do for money. Understand that there are tax implications for renting out a room, and you’ll have to pay taxes on everything you collect (even if a tenant reimburses you for utility expenses).

Don't expect perfection

Your tenant will change your life; you won’t have as much privacy as you are used to, and no matter how considerate s/he may be, your renter will occasionally make noises in the middle of the night. Be prepared to make some sacrifices if you plan to enter into this kind of situation.

Do put everything in writing

We’ve repeatedly stressed the need for a thorough, detailed rental agreement. Make sure your tenant understands all of the terms of the lease and follow through on enforcing all of the terms in your lease, including late fees and other penalties.

Don't be a bad landlord

You will be expected to keep the property in good repair and up to all legal codes regarding health and safety. You should also be careful to respect your tenant’s privacy and legal rights.

Being a landlord is not an easy task, but you can make it work if you are diligent and think everything through carefully. Do all of your homework in advance before you invite a renter into your home.

If you need help with credit or debt, or want to learn more about budgeting or personal finance, get started with free, confidential counseling and education right here at Credit.org.

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over two decades of experience in the industry.

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