Housing is insanely expensive in many cities around the world. However, some of them, like Hong Kong, compensate for that by having other cheap lifestyle factors, like food or transportation. The Bay Area on the other hand, does not seem to follow this trend, as not only is the housing expensive, but also other elements like food, entertainment, and transportation. Hence, many of these residents have jumped into the new trend of renting out vacant rooms to offset their costs of living. Therefore, renting out your rooms has its pros and cons, which I am here to explore with you.
As previously stated, renting out your rooms brings an extra source of income that can cover the additional costs of living in the Bay Area. The price of a room in this area usually ranges from $1,000 to $2,000 per month, which is a significant boost for your income. In fact, if you have more than one vacant room, you could even rent them all out, which would significantly increase your monthly rental income. With this money, you will have less pressure in other aspects of your life, such as paying your bills or buying groceries. You may even be able to treat yourself more often, or finally accept your friend's invitation to dine out (which you have been avoiding to save money). Additionally, it provides extra cash and diversifies your portfolio as it will be another source of income. This basically means you will still be able to sustain yourself if something were to happen, such as getting laid off from work, as you would still have $1,000 to $2,000 coming to you every month. That being said, you probably would be unable to survive long-term on rental income alone. Of course, you could maximize your flow of income by pricing the room perfectly using Rentalios. All in all, renting vacant rooms definitely takes full economic advantage of the unused property and yields a significant new source of income that not only helps you cover your own costs of living but also diminishes your risks.
Another benefit of renting out your rooms is the company you will have. Surely, this can be a benefit or a drawback depending on the tenant and yourself. For example, some people may enjoy living alone as there is less risk of disagreements and conflicts (which I will get into with the cons). However, if you are like me, you will really appreciate the extra company as living alone can certainly impact some people’s psychological well-being. Renting out your room also means you have the chance to meet new people and make new friends. In fact, it may even help you expand your knowledge as you learn new things from them. For example, back in your college years, you would learn a few things on other topics your roommates would discuss from their majors. This is especially true in the Bay Area, where everyone is actively pursuing their goals and dreams in the Tech industry, which is ever-growing. For example, you may be able to learn a few things about the tech industry or even try out new foods, as well as life hacks, you may never have known or tried. In other words, renting out your room not only gives you more company but also gives you a chance to expose yourself to new experiences and grow in the process.
Furthermore, the company also brings an extra set of hands in the house/apartment that could help you with various tasks. For example, your days of struggling to bring in your groceries in one trip would be over, as you would both be able to help each other with this strenuous task. Not to mention that you could also cook for each other, saving each other time as cooking for two people takes up less time than if both of you were to cook individually (Kitchen Economies of Scale). With this, you might even get the chance to taste new cuisines. If you have a pet, you may not need to give yourself a headache looking for a sitter when you go on vacation, as you could have your housemate take care of your pet while you are gone. Therefore, renting out your room could be of great benefit when it comes to help around the house. Of course, this may also vary depending on the renting contract and your relationship with the tenants.
The first drawback that you will face when renting a room out is the additional responsibilities. For example, you will have to set up a room for the tenant, find a tenant, find a platform to advertise your room, figure out the best time to rent out your room (which we have explored in another article of ours, “Best and Worst Times of the Year to Rent Out Rooms in the Bay Area”), perform background checks on tenants, generate a contract or rental agreements, among other responsibilities. In fact, you will also have to spend some time to figure out the right price for your room. This is because the wrong price could deter tenants from applying for the room, or leave you with opportunity cost. Thankfully, we also have that covered as Rentalios helps you find the price ranges for similar rooms like yours, taking another headache from your list.
Taxes and Laws:
To add to your responsibilities, taxes, and laws are also applied when you rent out your room. For example, the room you are renting out needs to follow certain guidelines for the protection of the tenant (these may differ depending on where you live). Hence, you may be required to make some changes to the room to be compliant with the law. At last, the income you make from renting out the room also counts towards your taxes. This means you may also want to revise your pricing, just in case you may end up paying more taxes and saving less money.
At last, you will have to start learning how to share, as the tenant will also need to use the kitchen and living room. However, this may not be an issue for you. In many cases, this drawback can actually be turned into a benefit if the right structure is used. For example, one could create a set of rules like having to inform each other when they are inviting people over. In fact, as mentioned before, you could even cook for each other, which would ultimately save time for both of you. Of course, there may be times that some tenants may be hard to live with. However, this can also be bypassed with the additional responsibilities you will have, as you could take your time to actually interview and find the right tenant for your room.
In conclusion, renting out your room may come with drawbacks, but the benefits certainly outweigh them, as many of the negative aspects can be resolved with great planning (which we discuss in our blog articles). After all, it provides a great additional income to cover your own expenses.
The Bay Area is one of the most expensive locations to live in, and many people have started renting out their rooms in order to cover their own rents or mortgages. However, I have a feeling that you already know all this and are probably in the same position since you did after all click on this article.