Rent out a room? Great Way to Have Additional Source Of Income in the Age of Sharing Economy!

Rent out a room, or basement or a portion in your home is not a new concept. In North America, It’s a social norm for teens to move out of their parents’ house once they have graduated from the high school.

Sharing Economy
Rent Out A Room: A Way of Sharing Economy

Where do all these teens go? At this age neither do they earn as an adult nor they are expected to do so. Usually, they move out for the purpose of having freedom from parents intrusion in their life. So usually they occupy the neighbour’s or family friend’s self-sustained basement or a portion of the house. This arrangement is more for the social acquaintance purpose and less for the economic purpose. It’s still the same traditions in rural areas or small towns.

The fruit of Sharing Economy

Urban North America is seeing a big revolution in the sharing economy. The successful examples are Uber and Airbnb. The high profile success of Ubar and Airbnb is the direct outcome of people’s tendency to save money, even though there are other contributing factors. In other words, we want to save money or make our living more affordable.

Rent out a room works on the same concept of sharing economy. If you have an additional room which is not being used, you can offer it in exchange for rent. The incoming renter or tenant would share kitchen, bathroom or parking with you as per whatever deal you stuck. You tread your privacy and comfort of being by yourself or with your family members with the rental income. If you check out the local Craigslist or Kijiji pages, they are full of the ‘Room Available’ advertisement. The most striking outcome of this phenomenon of the sharing economy is that society is more comfortable than ever in sharing their spare resources with each other.

Landlord’s consideration

From Landlord’s point of view, sharing your space with someone, known or unknown, in exchange for money would directly go into the mortgage, in a way. It becomes your sweat equity. Because you are giving away your comfort to create the source of income which would become your equity or asset.

Here are some important consideration to be made before you rent out a room in your house –

  1. Prepare yourself emotionally
  2. Where to advertise
  3. Create a good facility
  4. Clearly written Advertisement
  5. Interview thoroughly
  6. Lease and the clear rules of sharing

Prepare Yourself Emotionally

Are you going to be able to handle consistent intrusion in your privacy? Would you be able to be generous enough to take the responsibility of someone else’s household duty sometimes? These are kind of questions you should ask yourself before making the decision. Decency, positive attitude, respect for others and generous nature are some of the qualities one would require when the problem arises. Analyse your own nature. If possible speak to someone who is already doing ‘rent out a room’.

Where to Advertise and How Much You Can Charge

Before you make the decision, check out the room/share sections of either Craigslist or Kijiji(for Canada). You would have a pretty good idea of the ‘rent out a room’ market in your area. This is also a good exercise to figure out how much you can charge for your room and the facility. Both, Craigslist and Kijiji, are the most popular free online advertising resources. Kijiji does charge you after an initial free period, in the major cities where traffic is high. But the charges are not too costly against the service which you would receive.

Create a Beautiful Facility

By creating a beautiful and tidy facility, you’re setting up the higher expectation of keeping the apartment in the same status. It tells the prospective tenants something about you. If your facility is unorganized to start with, you won’t be able to control the future behaviour of the tenant.

Clearly Written Advertisement for ‘rent out a room’

You would include all the regular details in your ad like details of the place your are offering, rent amount, lease period and so on. But the most important part of this advertisement should be to give out signals of your expectation. One fact, that this is a sharing facility, should always be in your mind front and centre while writing this ad. Things like ‘Credit Check is required’ or ‘Credit Check is absolute must’ would set the tone of your future relationship with your prospective tenant. Don’t be very strict about requirement at this point. You can be more specific at the time of lease about what is allowed and what is not. Also be specific about the tenant screening process you are going to employ.

Interview Thoroughly

The showing appointment is a good opportunity of interviewing the prospective tenant. Again you have to remind yourself about actually living with the prospective tenant. My suggestion is to follow your instinct. Apart from usual tenancy questions about the job, previous landlord reference or why moving, you have to dig a little dip by asking a more personal question. It’s prudent to mention the special circumstances before asking personal questions.

Some examples of the questions –

  • Are you allergic to something?
  • How often are you home?

More pointed questions are like –

  • Do you have any kind of addiction? alcohol, marijuana or gambling…
  • Were you ever arrested?

If you go into the meeting with a few questions and spend at least 30 mins with the prospect, you would have a good idea of the person. And you can take it from there.

Lease and a Clear Set of Written Rules

The most important part of this arrangement called ‘rent out a room’ is the lease and the rules set out in the lease. in Many jurisdictions, if a tenant lives with the landlord and share kitchen and bathroom, the landlord and tenant law does not apply. However, if the tenant enters into the tenancy with the landlord with the written lease, it is valid and enforceable. Please check with your state or province website if there is any special guideline you have to follow.

The set of rules for the household responsibility will be equally important. The issues like inviting a guest, volume of music, using a kitchen and bathroom, household core like laundry and clean-up should be specifically addressed. It’s prudent to discuss all the rules in detail and have it initialled on each page in the rule sheet by the tenant.

 

Please share your view on the above topic in the comment section below this blog post.

Happy Landlording!

LEAVE A REPLY

Please enter your comment!
Please enter your name here


Sign up to our newsletter!