How to Rent Your Room to a Boarder
Have you ever considered renting your room to a boarder, but didn’t know where to start?
When I was 18 I was a boarder in Sydney, since then I have had boarders and rented my house on Airbnb as well as being a landlord.
Renting a room to a boarder can be a great way to make money on the side if it is done well and you get along, it can even pay your mortgage or rent if your landlord lets you sublet.
Check out this post on The Thrifty Issue outlining how to make your home pay for itself.
Before accepting the first application that comes along, check out these tips for renting a room to a boarder.
1. Research Prices of Rooms in Your Area
Get online and check how much boarders are paying in your area and what is included in the price.
You can use sites such as Flatmates, Gumtree and Facebook groups in your area to see.
Is it the room only and bills such as water, electricity and gas are split evenly or is it all-inclusive
Decide on a price that works in the property market you live in and that will make you money.
2. Check Tax
Before listing your room, research tax implications, for example, will the price you have selected push you into a new tax bracket?
How will that affect your income, tax return and other bonuses?
Look into capital gains tax and other implications of renting your home as well.
Cash in the hand is great, but I prefer to do things legally and recommend you do too.
This means you need to declare all income and check the tax implications for your situation.
3. Check Your Rights and Responsibilities
Most people are good, but you need to make sure you know your rights and responsibilities in case things go bad.
Depending on where you live in the world there are laws protecting squatters.
If you don’t have a solid tenancy agreement you might find it difficult to remove the boarder without proof and the law on your side.
Your local fair trading office or council should be able to give you the information you need about your rights, responsibilities and the law.
Check with your insurance company if you need extra insurance with someone else living there or if your current policy is still suitable.
Some insurers require separate insurance such as landlord insurance if you are renting a room to a boarder.
If you skip this step and something happens, you might not be covered by insurance and it could be financially devastating.
5. Will you Supply Furniture?
It’s your choice if you furnish the room or not.
If you do furnish it you can usually charge more, however, it means you are responsible for replacing furniture as needed.
In my experience furniture or no furniture made no real difference to being able to rent the room out.
When it was a short-term boarder they liked it furnished usually as they were between homes.
Long-term boarders preferred to have their own furniture most of the time.
Where will the boarder park their car?
Do you have off-street parking or will they need to park on the road?
If they do park on the road, is there room for them or will it cause issues with neighbours?
Most neighbours prefer it if you park cars in your driveway instead of on the street, it also impacts car insurance.
So having the option of more than one car space can make it more appealing.
Without a car space, you need to make it clear they need to park on the street or if there is no parking near the home, you need to state that too.
Some people prefer their privacy while others enjoy having a full home.
How much privacy do you need?
Do you have house rules in place already?
Are there separate living areas and space that is yours alone?
Consider all of this before renting your room to a boarder.
8. Create Your Ad
Once you know what rate you will charge for renting out your room and what that rate will include, create an ad.
List all the benefits, costs associated and the rate for the room.
Take clear, accurate and well-lit photos of the room and home so people can see what they are renting before applying.
Make it clear which areas are theirs and which areas are communal along with any facilities they can or can’t use.
This reduces the chances of either of you wasting your time.
Place the ad on sites such as Flatmates, Gumtree or join Facebook share rooms/rooms for rent groups and promote it on there.
9. Interview Applicants
Do not accept the first person who enquires.
Have a conversation with them, meet them in person, check references, check their online and social media profiles and get a feel for them.
When interviewing them ask them about previous places they have lived, living and eating habits, social life, occupation/income, goals etc.
Also discuss your expectations around things including privacy, rent payments, noise levels, guests sleeping over etc.
Get to know them to ensure they are a suitable candidate and will be able to pay the rent.
Take your time and be thorough with this part of the process because skipping it or simply accepting the first person without any research can be devastating.
10. Trust Your Instincts
If they present perfectly on paper, however, you have a terrible feeling in your gut, trust your gut.
Someone can say all the right things and present perfectly, but if they feel off to you, there is a reason.
You don’t need to know what that reason is or even give them a reason. Simply trust yourself and your feelings.
11. Use A Contract
Either create your own contract or get a lease form.
Include everything in it such as:
• Bond and deposit paid (e.g. 2 weeks rent)
• Date it was paid and term of the contract (e.g. 3months to see if you get on, with the option to continue if both parties agree)
• When rent is due – weekly/fortnightly and what day and will it be paid in cash, into your account or will you use property management software?
• Which areas of the house are they allowed to use/are they renting?
• Services you provide – do you provide any meals/cleaning/lifts?
• Share of bills – will it just be half each?
• Share of household chores – alternate cleaning or only clean up after yourselves or pay for a cleaner to come in and do communal areas.
• Room inspections – frequency and expectations
• Notice period – how much notice they must give you and you them if either one of you decides to terminate the contract.
• Specific house rules – noise control, house duties, overnight guests, if they can store things such as extra furniture at your house or not. Include everything.
If it is in writing and signed by both parties, it cancels out a lot of disputes.
12. Lodge the Bond Properly
Bonds are to be lodged correctly, not just be held in your bank account.
If you don’t lodge it there can be issues and legal ramifications.
13. Document Everything
Before they move everything in, take pictures and note everything already wrong with the room and house.
Better yet, go through it with a video camera and the boarder present then create a copy of it for each of you or load it to Dropbox for future use.
This will help settle disputes if any arise when they leave (or they cause any damage.)
14. Leave Them Be
Remember the room is theirs and you cannot go in there.
Let them live their life their way, unless there are issues with safety, cleanliness or similar that need to be addresses.
Not everyone gets along and you may find this boarder and you are not compatible.
If that is the case, you can either simply live and let live or address it and see if they would prefer to leave as well.
Don’t let that experience stop you from trying again.
Good luck with it.
I know this list might seem over the top, but it’s better to be safe and prepared than sorry.
Renting a room to a long-term boarder is different to a quick couple of nights from an Airbnb guest, both can make you good money though.