Renting out a room in a home you own is a great way to bring in additional income to help with a mortgage, refurbishment or your retirement.
But there’s a lot of preparation that goes into becoming a landlord, especially if you will be living under the same roof as your tenant. Here's how to avoid some pitfalls:
Are you insured?
A standard homeowner’s insurance policy covers an owner-occupied, single-family home, not a home where a room is being rented out to a tenant. Such a policy will not cover damages your tenant may cause to your property or injuries they may suffer whilst inside. A landlord insurance policy generally costs more but you have to weigh that against your peace of mind.
How much rent is fair?
You don’t want to charge too much but you don’t want to charge too little either. Be sure to take time to itemise all of the expenses you are incurring, including the costs of utilities etc. To get an idea of what the renters market is like in your locality, check out rooms for rent as if you were a tenant, to see what other landlords are charging.
Advertise
Initially, you may want to advertise your room for rent using word of mouth and your social networks. Friends, family and colleagues can be a great resource. Contact nearby colleges and universities such as
Arts Educational School in Bath Road, Chiswick, W4, to see if they have an department that advertises rooms to students. Gumtree is another option, as are bulletin boards at locally owned and run businesses.
Find out about your tenant
Run a background and credit check on any potential tenant. It may sound a bit mean or paranoid but without it you have no idea if they have been evicted previously, is up to their eyeballs in debt, or served time for arson.
Lay down some ground rules
Living under the same roof as your tenant means there is potential for conflicts. Don’t overdo it (Sheldon Cooper anyone?) but before you and your tenant sign anything, agree some boundaries for behaviour. Unreasonable amounts of noise, smoking, pets, cleanliness, and overnight visitors are all things you should discuss.
Have a tenancy agreement
This spells out in detail what your tenant can and can’t do while under your roof. You can download some simple examples. If you have questions about the language,or want to add to or remove something from the agreement, seek out the advice of an experienced landlord or a lawyer.
Source: www.homeinsurance.org
Are you insured?
A standard homeowner’s insurance policy covers an owner-occupied, single-family home, not a home where a room is being rented out to a tenant. Such a policy will not cover damages your tenant may cause to your property or injuries they may suffer whilst inside. A landlord insurance policy generally costs more but you have to weigh that against your peace of mind.
How much rent is fair?
You don’t want to charge too much but you don’t want to charge too little either. Be sure to take time to itemise all of the expenses you are incurring, including the costs of utilities etc. To get an idea of what the renters market is like in your locality, check out rooms for rent as if you were a tenant, to see what other landlords are charging.
Advertise
Initially, you may want to advertise your room for rent using word of mouth and your social networks. Friends, family and colleagues can be a great resource. Contact nearby colleges and universities such as Arts Educational School in Bath Road, Chiswick, W4, to see if they have an department that advertises rooms to students. Gumtree is another option, as are bulletin boards at locally owned and run businesses.
Find out about your tenant
Run a background and credit check on any potential tenant. It may sound a bit mean or paranoid but without it you have no idea if they have been evicted previously, is up to their eyeballs in debt, or served time for arson.
Lay down some ground rules
Living under the same roof as your tenant means there is potential for conflicts. Don’t overdo it (Sheldon Cooper anyone?) but before you and your tenant sign anything, agree some boundaries for behaviour. Unreasonable amounts of noise, smoking, pets, cleanliness, and overnight visitors are all things you should discuss.
Have a tenancy agreement
This spells out in detail what your tenant can and can’t do while under your roof. You can download some simple examples. If you have questions about the language,or want to add to or remove something from the agreement, seek out the advice of an experienced landlord or a lawyer.
Source: www.homeinsurance.org
