We rented out the spare bedroom of our current home 2 of the 5 years we've lived here. And we're doing it again starting today. We plan to keep investing in real estate rentals in the foreseeable future as long as it keeps paying off. However like with anything there are pros and cons.
We had three tenants over 2 years. The first one was our friend, but he only needed a place to stay for 3 months. We enjoyed the extra income so much that we looked for another tenant (this time on Craigslist) when he moved out. The second renter stayed for 1.5 years and was awesome. Then we hit Craigslist again and got the third tenant – a complete idiot and jerk – for 3 months and then we sort of told him to get his crap and get out ASAP. He vacated pretty fast. That all happened from 2007-2009.
Well, now a set of our friends are in a bad situation with a physically threatening landlord that rather they didn't leave, so they're hightailing it into our house for the next few months. They appreciate being able to leave their current situation and we will appreciate the extra cash flow while we are saving up some cash on hand. If it works out, they'll continue being tenants in our new home. If it doesn't, they'll find a new place before we move.
Questions About Renting Out a Spare Room
Anyway, Kris from Balancing Money and Life noticed in the comments of our updated numbers post that Mr. BFS and I have rented out a spare bedroom of our home before. She and her husband were thinking about doing the same, so she had a few questions. I thought our emails back and forth would make for an excellent post, lol. And seeing that we are starting this up again, it couldn't have come at a better time.
Did you use a rental contract (and if you did, did you draw it up yourself, or did you have a lawyer draw it up)?
I downloaded a general rental contract online and changed it to suit our needs. I assume having a lawyer involved is much safer. So please take all of these answers as they are – the way I handled it because I am lazy.
Did your tenants have access to all areas of the house, free use of the kitchen, etc.?
Yes. Our bedroom, master bath, and office was off limits, but they had complete access to the bottom floor which has the kitchen, living room, dining room, and the laundry room in the garage. They parked in front of the house instead of the driveway so we could all leave whenever we wanted.
Was the room you rented furnished?
Yes and no. Two of the tenants used an Ikea bed we had from college, an end table, and a book shelf. One of them provided all of his own stuff, so we just put our extra furniture in our above-the-garage storage space when it wasn't needed.
What about utilities?
Utilities are included in the rent. We even have cheap high speed internet they can use for free as a bonus. All of this is within reason of course so if people are leaving the lights on all the time we're going to say something.
Did they have a private bathroom?
Yes. We have a 3 bedroom, 2 1/2 bath house. So they used the third bedroom which is right next to the second full bath. Pretty much, one end of our upstairs hallway was for the tenant and the other end was ours.
Did you have any concerns about damage/theft, etc.? Did you ask for a rental deposit?
Yes, theft was a concern. We now insist our tenants have the best renters insurance they can find and even recommended Lemonade renter's insurance which is available in Texas. There was a one month fully-refundable deposit that we requested that would be used in case of damage, rent owed at the end, and/or cleaning when they left if it was abnormally dirty.
We refunded this deposit in full for our first two renters but had to keep $60 of the last guy's to have his bathroom deep cleaned by our housekeeper. There was something sticky on the whole 2 sink vanity, and he didn't clean his shower very often. I sort of kept an eye on our stuff weekly to make sure nothing small but loved was missing. Other than that, we just hoped our tenants wouldn't be thieves.
Did your rental agreement include stuff like expectations regarding clean-up, etc.?
Yes. It asked for a reasonable amount of cleanliness. It stated that the shared areas would need to be kept clean by both parties whenever used. It also said that their personal areas needed to be upkept to avoid any damage to the home. I spot checked once in a while, but all 3 tenants were fine.
What about overnight guests/ parties/ loud late night issues?
No parties ever, but overnight guests were allowed occasionally. Our agreement stated that anyone staying more than one night in a row would be considered a tenant and would be subject to paying rent too. Our second tenant had girlfriends over pretty regularly, but they were super clean and quiet, so we never pushed the issue. He ended up marrying the last one we met and buying a home with her. We still miss him, lol. One issue we continue to have is our tenants not knowing how to properly disarm our Vivint home security system. How hard can it be? Super annoying when the cops show up and we have to explain this to them.
How did you handle fridge/freezer/pantry space? I assume all your tenants bought their own food and you provided dedicated shelves? Did you have schedules for using the kitchen, etc.?
We left the top refrigerator shelf and half the freezer open for our tenants. There were no kitchen schedules, but we always seemed to be on different time tables, so it wasn't a problem.
If you have any other questions or advice, please comment below and I will get back to everyone in the comment area by Tuesday night hopefully. 🙂