1. Initial Research
This step is probably the most important step as this can potentially break your plans of renting out your rooms. This is because some homeowner's associations may not allow renting, which would ultimately make you waste all your time setting up a room that you cannot rent out. Additionally, there are other government laws that come with renting out your rooms, such as the usual access to clean water and plumbing, or any other requirements that differ depending on your local government laws. Some places may even require you to have a license to rent out the property. Hence, this step not only prepares you for the following steps but also prevents you from violating a law you didn't know about. Additionally, you should be checking up on your insurance to see if you are allowed to even rent out sections of your house. After all, renting out your house results in higher risks, and some insurance agencies may not cover any additional damage to your property that could come with renting. Hence, you should research on your insurance and determining whether you may need landlord insurance, which usually costs 15% to 20% more than homeowners insurance.
2. Choose What Room You Will be Renting out.
Although this is quite an obvious step, it is a crucial one due to the previous points noted. Hence, you should be finding a room satisfying all the laws that apply to you. Additionally, you also have to take into account other aspects. For example, you may want the tenant to have a room closer to the entrance so that you don't have them walking through the entire home just to get to their room, which would not only make it more convenient for them but also for yourself. You may also want to pick a good looking room, to ensure actual demand for it, making it easier for you to rent out a room at a higher profit. Therefore, there are many distinct factors to be considered, so make sure you pick the right room that not only satisfies the laws, but also your own preferences.
3. Figure out When you Want to Rent out Your Room.
After deciding on what room to rent, the next step is determining the best time to rent out your room. This is because the renting market has seasonality, so the time you rent out the room may affect the price of your room and the difficulty of finding a tenant, as we described in another article of ours, “Best and Worst Times of the Year to Rent Out Rooms in the Bay Area”. Once you have picked the period, you will have an idea of how much time you will have to establish your room and place it in the market, making it easier to plan and organize, instead of hectically rushing to rent it out.
4. Research Your Area
You will want to examine other rooms in the area around you and investigate key aspects such as amenities they have and to what extent they are pricing their rooms for. This step will allow you to understand your geographic market better, and establish your room accordingly to keep your room competitive and attractive to tenants.
5. Set up Your Room.
After getting the hang of how other rooms around your area, and the laws that apply to you, you should start setting up the room. This means cleaning up the room, securing your valuables (Even the ones around your house, as tenants may need to use other parts of the house over time). This also includes the addition of new amenities you may want to add in order to make the room more appealing for tenants. The last thing to do after setting up the room, would be to take pictures of your room (For when you list your room). For this, you will need to make sure the room is well lit, organized, and appealing. However, the most important thing is to make sure you are portraying the room as accurately as possible, so tenants know what room they are renting the instant they see the images. Hence, I would recommend to take pictures from various angles, which would make it easier for tenants to imagine themselves in the room.
6. Price Your Room.
This part is one of the most important aspects as it is a major factor tenants consider when renting rooms, and it is your source of income. Hence, the challenging part is to set a price that not only attracts tenants, but also maximizes your profits, since it is the main reason you are renting out your room in the first place. Nevertheless, there are many ways you can make it easier on yourself when pricing your room. One of them is through Rentalios, which gives a bigger image of how much you could be renting your room for, based on the amenities you offer, and your geographic location compared to other rooms in the market. In other words, you want to make sure you have the right price for your tenant and yourself.
7. Determine what platform you will use to list your room.
Here you will have to determine where to list your property. Now a day, there are many platforms you can list your rooms with. For example, Airbnb, SpareRoom, Rentberry, and many more. Each of them will be distinct, with their advantages and disadvantages. For example, some of them may provide much more exposure than others, and some may charge more in commissions and fees to users. Nevertheless, the majority of the time I would recommend picking the one that offers the most exposure, as that would ultimately bring more potential interest for your room, making it easier to find tenants while also setting profitable prices (If your room is highly demanded). Of course, the right option will vary case by case, as different landlords will have diverse priorities and situations.
8. Pick Your Tenants.
Once your room is listed, you will begin to receive applications from potential prospects. Here you will have to determine what tenants you will want to live with and rent to. However, one has to still comply with the laws, and hence cannot refuse to rent to anyone based on the folowing: Race, National Origin, Age, Religion, Disability or Handicap, Sex, Family Status, and Sexual orientation. Nonetheless, the law does not protect against criminal history. Hence, you should stay consistent when picking tenants and apply the same criteria to all applicants equally. All in all, you should always perform background checks, and even conduct interviews. After all, you will be living with them, so you should be able to get along.
9. Rent out Your Room.
At last, you will get to rent out your room! Nevertheless, there still are many other tasks that I was not able to bring up in this short article. For example, you will have to include this new source of income in your taxes, and also keep searching for new tenants or contract renewals to keep your room occupied and making money for you. In fact, every case may be distinct in their own way, be it with their unique local laws or individual preferences, which is why this list does not cover everything you may need to know. Nevertheless, I hope this article was helpful to you and has given you a basic foundation to start your adventure of renting out your room.
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.