8 Common Pitfalls Homeowners Face Renting Out a Spare Room

There are many reasons why a homeowner may choose to rent out their spare room. It’s a fantastic and sustainable way to earn some extra income every single month, and it’s a great way to meet new people, especially if you live alone.  

However, if you’re a first-time landlord, it’s easy to fall into some of the pitfalls of renting out your bedroom. And, if you’re not careful, this can lead you into a lot of trouble. But worry not – here are some common mistakes homeowners make when renting out their spare room and how to avoid them. 

Common Mistakes to Avoid When Renting Out a Room

1. Not Researching Local Renting Laws
Before even considering renting out a room in your house, you need to look into rental laws and regulations in your area. This is because different cities will have different rules when it comes to renting out in both the short term and the long term. If you violate these, even unknowingly, you may get into legal trouble and end up paying big fines.

You may need specific permits or licenses to rent your property. It can even be illegal to operate short-term rentals in some areas. Furthermore, failing to research local laws means you may even fail to comply with tax regulations (such as reporting the income you make from renting), which can land you in some trouble.

That’s why it’s always important to check your city’s regulations before you even think about listing your bedroom. Consulting a local attorney or even a real estate agent can help you ensure you’re doing everything by the book.

2. Forgetting to Do Background Checks on Potential Tenants
Once you’ve decided to rent your spare room, you may want to speed up the process and invite someone into your home as quickly as possible. However, that would be a mistake. If you don’t do background checks on potential renters, then you may end up with a whole range of problems, including unpaid rent, damage concerns, and even safety concerns. 

Some potential red flags that should make you pause include a poor credit score, financial instability, a history of previous evictions, and an unclear employment status. If your potential tenant is hesitating to provide references or consent to a background check, this is another red flag, as they may have something to hide. Make sure to screen tenants so you know they’re trustworthy and reliable but once you sign a lease and allow them to move in they have tenant rights.

3. Not Using the Right Rental Platform
Using the right rental platform makes all the difference when it comes to finding the right renter for your spare room. You’re not just looking for someone to rent your property. A lot of the time, when you’re renting out a spare room, you may be living with the person in question. That’s why roommate finders are better options than typical rental listing platforms, as they let you filter out people you’re unlikely to connect with. They also tend to offer better screening and communication tools, which makes finding someone reliable much easier.

4. Picking Someone Who is a Bad Fit
This goes hand in hand with the point above. A potential renter may look good on paper. They may have a good job, and their background check may have come back clean, but that doesn’t necessarily mean they’re the best fit for your home, especially if you’re living there, too. You need someone who will be comfortable and compatible with your lifestyle – from your habits to your expectations. 

One way to discover whether you’re a good fit or not is by scheduling an interview. This doesn’t have to be formal – think of it as an informal chat where you can talk about your work schedules, lifestyles, and more. You’ll be able to see if your personalities are compatible as well before making that all-important final decision.

Renting out a spare room has its benefits, but it also comes with risks, especially if you don't avoid these eight common pitfalls. #realestate #renting Click to Tweet

5. Missing the Mark When Pricing the Room
One of the biggest pitfalls that homeowners make when renting out their spare room is pricing it incorrectly. You may be worried about pricing it too low, as this means you won’t be able to make a sustainable income from it, or you may be concerned about pricing the room too high. This means you may not even secure any views for the property.

You can’t just pick a number and hope for the best. Pricing depends on a lot of factors, such as the location of your property, the size and condition of the room, the length of stay, and the utilities included in the price. 

When it comes to pricing, it’s best to do your research before setting a figure. Look at what other homeowners in your area are charging to rent out their rooms, and take note of what they’re offering. Are the bills included? Does their room come with additional features, such as air conditioning? These can all help you come up with a price that’s competitive yet fair, meaning it won’t scare away any potential buyers.

6. Forgetting Lease Agreements
Renting out a spare room is a bit different from renting out an entire house. In fact, many live-in landlords and homeowners may even not draft up any contract at all, and decide to take their new tenants at their word. This is a mistake, as it can lead to problems down the line if any legal challenges or issues come up. Writing up a formal contract or a written lease can help you avoid all of that.

Make sure to outline things such as the rental amount and the monthly due date, security deposit terms, and duration of stay. Make sure to highlight grounds for eviction or termination. You could also include additional information such as house rules to make sure you’re on the same page. This won’t just protect you – it will protect your tenant, too.

7. Forgetting Insurance Coverage
Insurance is so important when you’re renting out your home. If you already have home insurance, you might assume that your policy will cover rental situations. However, this isn’t always the case. Standard agreements may not cover tenants, which will be a problem if any disputes, damage, or even accidents come up. 

Contact your insurance provider to chat about options for coverage – a landlord or renter’s insurance might be a better fit for you.

8. Not Realizing How Much Time and Effort It Takes
Renting a spare room usually takes a lot more effort than people realize. Yes, it’s simpler than renting out a whole house, but it’s also so much more than listing the space on a platform and collecting the rent each month.

Just like when renting out a house, you still need to manage your tenant (or tenants if you have more than one room to rent) and handle maintenance issues. You’ll also want to create a welcoming environment for your new roomie, which means doing your best to resolve any conflicts before they get out of hand.

All of this takes time and effort, and it can also have an impact on your mental health. However, avoiding the pitfalls above can help.

Final Thoughts

If you have a spare room, renting it out can be a game changer – or even a life changer. It can bring in more income, help you make use of a room that was gathering dust, and even give you a friendly face. However, that doesn’t mean that it’s without its challenges. That said, avoiding the pitfalls listed above can make the process so much easier for you and your tenant.

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Renting out a spare room has its benefits, but it also comes with risks, especially if you don't avoid these eight common pitfalls. #realestate #renting Click to Tweet

About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “8 Common Pitfalls Homeowners Face Renting Out a Spare Room”

Michelle has been specializing in residential real estate since 2001 throughout Wellington, Florida, and the surrounding area. Whether you’re looking to buy, sell, or rent, she will guide you through the entire real estate transaction from start to finish. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, Lake Clarke Shores, and more.

8 Common Pitfalls Homeowners Face Renting Out a Spare Room