You might have a vacant room or unit inside your house that you have no idea of what to use it for. Maybe you previously had a housemate who moved away, or you were planning on setting it up as a home gym but never really found the time to actualize it.
With a spare room in your home, you might also be considering renting it out. This can be a good idea since you can utilize it and at the same time, you can earn extra money. Or is it?
Like all the decisions you have to make, you should always weigh the pros and cons. It is better to know the possibilities that could happen when you decide to take on a renter. I’m not here to discourage or scare you, but I am going to list down the few things that could go wrong if you pursue this so that you can make a more reasonable decision.
Taxable Income
Although the main point of having someone rent a spare room is to gain profit, you must keep in mind that the income will be taxable. You will not be able to enjoy the full rental payment your tenant will pay you. The more income you generate, the larger your tax will be.
However, this can be lessened when you include the expenses related to the rental. Some examples are the expenses used for maintenance, repairs, advertising, and utilities, to name a few.
You should compute your expenses and your profit after taxes to help you decide on this. You can opt to charge for a higher rent but remember to check your state laws on the maximum rent you are allowed to charge.
Possible Damages
One of the things that you must do is to screen your tenants before letting them stay with you. There are background checks and information verification to be done before you choose an applicant. Any landlord would want to have a responsible tenant.
Even if you find a good tenant, they can still be the cause of damage without intention. They can accidentally leave the stove on while doing other chores and starting a fire in your home. They might break appliances because they do not know the proper way of using it. Whether intentional or not, damages caused by your tenant will still be your problem.
The best thing to do is to collect a security deposit to cover the cost of repairs if damages do occur. Accidents are not intended and they probably do not want to cause any, but they should still be held accountable if anything happens due to their negligence.
Overstaying Renter
Renting out a room can be a temporary gig for you. You may want to stop it at one point because it doesn’t suit you anymore or you might grow tired of it. Or maybe you just wanted to get your privacy back. Whatever the reason is, you now have to inform your tenant of your plans.
Good tenants will leave once their lease ends and that’s that. But if your tenant refuses to leave even after the contract is over, you will have to go through an eviction process. This will not only cost you money, but it will also cause you stress.
Law Breaking
One of the things that you should do before entering this business is to know your state’s housing laws. Some provisions vary from state to state so you have to familiarize yourself with yours to avoid any lawsuits.
One of the things housing laws require is that you should have a habitable unit for your tenant. It also has to be safe and secured to be considered legal. This should be one of your priorities because it will also make your property listing more appealing to applicants when you publish it on Padleads. Remember to make it very attractive because it will be syndicated to other websites where it can be seen by thousands of home hunters.
You also have to follow the health and sanitation codes to avoid pests or harmful bacteria. Always maintain a clean environment for your tenants.
Being a landlord is never easy but if you want to do this full-time, you can start with that spare room in your house. Whether you’ll enjoy it or not, it won’t hurt to give it a shot. It’s a good way to test the waters first before diving in deeper.