How to Start Renting Out a Room in Your Primary Residence

Bethany White September 29, 2022 | 7 min read
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Renting out a room in your primary residence might seem like an easy way to bring in some extra cash, but there are a lot of personal and legal factors to weigh before posting that listing. All you introverts out there (or should we say in there? You’re probably indoors right now*) may already be shuddering at the thought of a stranger down the hall in your home. Fair enough. But, for the more socially inclined, let’s get into all the questions you may have about renting out a room in your house.

*This joke was written and endorsed by an introvert, from indoors.

8 factors to consider before renting out a room in your primary residence

As you start your live-in landlord journey, two big questions likely come to mind: 1) Can I rent out a room in my house? and 2) How do I rent out a room in my house? To help get the answers you need, let’s explore eight key factors.

  • Landlord-tenant laws
  • HOA restrictions
  • Zoning laws
  • Terms of your mortgage
  • Rental income taxes
  • House rules
  • Lease agreements
  • Tenant screening processes

1. Landlord-tenant laws

Landlord-tenant laws can become tricky in a primary residence because issues that you wouldn’t consider in your own home might breach the requirements for a rental property. The exact laws will depend on where you live, but in general, you can expect to uphold the following standards:

  • Provide advance notice or obtain permission before entering the tenant’s unit. Or in this case, room. Your lease agreement should outline clearly which areas in the home are considered common and which are private to avoid confusion here.
  • Maintain a safe and habitable home. Repairs that you might be tempted to put off, like fixing the hot water in the guest bathroom or changing dead lightbulbs, could create potential liabilities if you don’t address them while your tenant is living in the home. Oh, and no mold. That’s a big one.
  • Provide and maintain promised amenities. If you advertised your home as having certain amenities like in-unit laundry or reserved parking, you’re required to keep those amenities functional and available for your tenant.

2. HOA restrictions

If your neighborhood has an HOA, they may have restrictions about renting out rooms in your home. Get in touch with your HOA and check their bylaws to make sure you’re not in violation of any policies before you start composing that perfect Craigslist ad.

Pro Tip: Learn more about HOAs and how to handle them here.

3. Zoning laws

Your homeowners association isn’t the only one that may have renting restrictions. Your city could also have zoning laws in place that may prevent you from using your home as anything other than just that: your home. If you can rent out a room, you’ll likely still need to get a license or permit from your city to do so.

4. Terms of your mortgage

Rental income can be a great way to pay off your home loan faster. But before you go all in, make sure that renting out a room in your primary residence doesn’t violate any of the terms of your mortgage.

Pro Tip: Your mortgage lender would be happy to keep in touch after you’ve closed on your home loan. So, if any questions about your terms arise, don’t hesitate to reach out for clarification.

5. Rental income taxes

Qualifying for more tax benefits* is a great reason to become a homeowner, but becoming a landlord can actually mean paying more taxes than if it was just you living in your home. When you’re budgeting how much to charge your tenant, don’t forget that not all of that will be going into your pocket. You’ll have to pay a marginal tax rate (the amount you pay for every additional dollar of income) plus local and state income taxes.

*This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before making the decision to buy or refinance a home.

6. House rules

Make sure to outline your house rules in your lease agreement, otherwise your tenant won’t be liable for violations. Some common house rules to consider implementing include:

  • Rent due date and late fee policies
  • Maintenance responsibilities
  • Pet policies
  • Renters insurance requirements
  • Quiet hours
  • Security deposit policies
  • Lease renewal and notice periods

Pro Tip: If you find your list of house rules growing to an increasingly complex matrix, that’s usually a good sign that landlord life is not for you. The more particular you are about your space, the harder it will be to share it.

7. Lease agreements

Your house rules are an important part of your lease agreement, and your lease agreement is an important part of your success as a landlord. In other words, make sure you get it right. In addition to house rules, you’ll want to include the following in your lease agreement:

  • Lease duration
  • Rent and security deposit amount
  • Definition of common areas
  • Utility responsibilities

Your lease agreement is what makes the rules you set legally binding. So, if you’re not sure how to go about drawing yours up, it’s never a bad idea to consult a lawyer.

8. Tenant screening processes

Taking all the necessary legal precautions before renting out a room in your house is only half the battle. You also need to find the best way to choose the right tenant. The first step is creating a rental application that sets out the criteria you’re looking for (within reason, don’t violate fair housing laws, please). The more thorough your application process is, the better you’ll be able to assess whether or not an applicant is a good fit. If you’re not sure where to start, check out this guide.

And remember, it’s not just about the application. Since you’ll essentially be roommates with your tenant, it’s also helpful to meet them in person and get to know a little bit about them. Not too much, though—it’s hard to be a landlord and a friend at the same time.

Is there anything else to consider before renting out a room in my primary residence?

Nope!

Kidding. Ultimately, the decision comes down to whether or not you’re comfortable having another person in your home, but you may also want to ask:

  • How much rent should you charge? It should be less than the average one-bedroom apartment in your area, otherwise there’s not much motivation for a tenant to choose your one room over a separate apartment.
  • How much time do you spend at home? If you’re away from home often, it may make sense to earn additional income from your residence while you yourself aren’t able to enjoy the perks of homeownership.
  • Is your home in a good location? You likely won’t get many applicants for your rental if it’s not located near anything that would make life easier for your tenants, like restaurants or public transportation.
  • Are you a good roommate? All the criteria you’re assessing in your tenant, they’re also assessing in you. Be honest with yourself and make sure you’re ready to responsibly cohabitate with another person. Renting out a room in your home requires a little more social finesse than college freshman dorm living.

So, should you rent out a room in your house? That’s your call. But if you do decide to embrace your inner landlord, now you know where to start. Good luck and remember the golden rule: Treat others the way you want to be treated.

Make sure you’re legally and mentally prepared to share your space before you decide to rent out a room in your primary residence.

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About the Author
When Bethany was a kid, her mom took her to the zoo, museums, and more fun spots—then made her write essays about them. Now, Bethany deploys those skills as a copywriter at Cardinal Financial and has to admit: she owes her mom one. When Bethany’s not dreaming up fresh takes on mortgage lending, you can find her running, spoiling her cat, and refusing to improve as a chef.