As home values increase, housing becomes less affordable to those just entering the market. If your taste ranks higher than your budget, you may benefit from renting out part of your primary residence. This blog will focus on long-term rentals (more than 30 days). Consider the following if you’re getting into the room rental business.
Insist on a Lease and a Rental Agreement
The lease is the official legal document while the rental agreement is akin to a roommate agreement. You’ll need both to keep things on the up-and-up.
A basic lease should include the length of the housing arrangement (usually one year at a time) as well as the monthly payment and all expenses to be incurred by the renter. Leases must include certain required verbiage which varies by state. Check with a real estate attorney in your area to make sure your lease covers all the required bases.
The rental/roommate agreement is a document that could theoretically hold up as a legal contract. It spells out all the big things and even some of the small things that go into cohabitating. For example, who cleans what, how loud the music can be, and how late guests may remain in the home.
Do a Background Check
This includes calling personal references, performing a credit check, and ordering a criminal history/background check. It also helps to call on previous landlords for payment history when possible.
The site https://www.intelius.com/background-check is a good place to start. It is also advisable to review your county’s sex offender registry before committing to a new housemate.
Decide Which Space to Rent
Prep the bedroom that will be rented. Make it marketable and presentable with a good deep cleaning. Present the space in the condition that you expect it to be returned to you when the lease ends.
Prep the Whole House
Put separate locks on every bedroom door and program separate entry codes for keyless entry. If your home does not have keyless entry, then have extra have keys ready. Hide your valuables, preferably in a locked safe, before you present your home to potential renters.
Become Familiar with Equal Housing Regulations
The basics of the Fair Housing Act can be found at https://www.hud.gov/program_offices/fair_housing_equal_opp/fair_housing_rights_and_obligations.
Look For a Tenant
Many landlords find a tenant within their existing sphere of influence. Start by asking around to find out if anyone you know is looking to rent. Social channels can be a good place to scout for a prospective tenant but remember that nothing you share on social media is confidential.
Keep Records for Your Taxes
Rental income is taxed. Start thinking of yourself as a landlord for tax purposes. Keep detailed records of income you receive as well as expenses associated with renting part of your home. A few examples of deductible expenses include marketing, background checks, and door locks.