Profit From Renting Rooms in Your House
By Steve Gillman
You have to be prepared for some drama when renting rooms
in your house. Unlike renters in another house or apartment you
own, these ones will be right there with you on the front porch
or in the kitchen. That's okay if you like people and you choose
good tenants, but it's still something to keep in mind.
I did this for years, and it was worth it. I made friends
and made enough money to pay off the mortgage early. Later, when
I married, we built a small efficiency apartment on the back
of the house so we would have our own space--that's one way to
deal with the loss of privacy that comes with renting rooms in
your house.
Why would you want to rent rooms to strangers (or even to
friends)? The money, of course--and I'll have more on that in
a moment. But keep in mind that this is something you can do
starting this week if you own your home, and it is instant cash,
which comes in every week (if you charge that way). You also
have more control when renting rooms versus renting a house that
you buy for the purpose. You can keep track of your renters easily
when they live with you.
How Much Can You Make?
My first house was a mobile home on a small lot in a small
town in Michigan, and I easily got $75 weekly for a room in the
1990s. That's $3,900 per year, by the way. I eventually rented
out three rooms when we had built our efficiency unit on the
back of the place.
What you can charge depends on rental rates in your areas.
If you live in a college town where two or three young people
typically pool their resources to afford a $950-per-month house
or apartment, you should easily get $100 weekly if you include
all utilities. Two rooms at that rate and you'll have an extra
$10,000 annually (the added expenses of additional people living
in your home are minimal).
Ways to Make More | Related Opportunities
| Tips
I set up a "grocery store" in a closet and made
money selling ramen noodles, potato chips and whatever else my
tenants wanted me to stock. I bought pop for 25 cents-per-can
and sold it for 50 cents. I charged $5 weekly for parking an
extra vehicle in the yard.
Always include every utility. The attraction of renting a
room is having no surprises and no bills to plan for. Also, you
don;t want to deal with three different people arguing about
when they'll have the money for bills and who is using too much
water, etc. If the heating bill goes higher, just raise the rent
and forget about it.
Skip the security deposit and you'll have less paperwork (separate
accounts are required for deposits). Also, by keeping it less
formal you remind the renters that this is your home, and they
are less likely to appeal to rental laws if you need to evict
them.
Charge by the week if your tenants are paid that way. Many
room renters are great people, but an inability to plan for coming
expenses is common. make it easier for them and for yourself.
Also, renters will feel that $100 weekly is $400 per month, when
it is actually $433.
Qualifications / Requirements
Generally you need to own your home to do this, although if
you rented a large house and had permission from the landlord
(perhaps by paying higher rent), you could rent out several rooms
and essentially live for free.
First Steps
Look in the local newspaper classified ads to see what people
are getting for rooms in your area. You can also check on Craigslist.
Create a set of house rules that every renter has to abide by.
Try one renter for a while before you commit to doing this with
more.
Resources
http://www.howtorentrooms.com
- This is my own e-book on the subject, with details on how to
determine how much to charge, house rules to have, how to deal
with problems and much more. It is now free.
http://www.easyroommate.com
- A website where you can find tenants.
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