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Doing it Again – Renting Out a Spare Bedroom

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.

Back Story

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.  🙂

37 thoughts on “Doing it Again – Renting Out a Spare Bedroom”

  1. Travis @DebtChronicles

    We’ve had someone live my wife and I 3 times during our 16 year marriage. The first time was my wife’s cousin – who we invited to live with us while she went to college, so she wasn’t expected to pay anything.

    The second time, it was a friend of ours who we did charge rent. The room was partially furnished and since she was a friend she was treated more like a member of the family than anything else.

    The third time was my wife’s younger brother – who also stayed with us while he went to college- but he was expected to pay rent. Having a college male who wasn’t real focused on school stay with us (a family) didn’t work out so well.

    That will be the last tenant we ever have.

  2. Michelle

    Your method is very similar to our first roommate. Our old roommate was horrible, and even with rules laid out he didn’t listen. UGH!

  3. Steve

    The first place I bought had a finished basement that I rented out. Then when a buddy of mine got divorced he rented a room from me…I never had so much cash flow! Fortunately they were all great renters to boot!
    Good luck Crystal.

  4. Call Me What You Want Even Cheap

    I’ve never rented out a room, a basement and an apartment is fine, but I don’t think I would be comfortable renting out a room to a stranger. I probably watch too much America’s Most Wanted! Lol!

  5. Daisy

    Interesting – what about privacy? Was that ever a problem? Did the tenants usually stay in their rooms when home?

  6. Little House

    I think renting out a room is a terrific idea, but I once brought this up to my husband and he was really against it. He likes his privacy. 😉

  7. Linda

    I’ve rented out rooms, too, and found the experience mostly positive. I got my first set of roommates through Craigslist. One of them was with me for 1.5 years and the other bedroom was rented to two different people over that timeframe.

    Both of the people renting the second bedroom were friends of the other roommate, but the first one didn’t work out very well; I had to terminate his rental agreement because he tried to sneak a dog into the house, which was against our rental contract. It was a relief in other ways to rid of him since he was so messy in the kitchen and grunged up the stove quite a bit.

    I’m currently getting rental income from my live-in boyfriend, which is the best of both worlds. 🙂

  8. Careful Cents

    I’ve never thought about renting a room, even a few months at a time. That sounds like a nice idea. A little extra cash, you can help someone get on their feet. It’s a win-win.

  9. This Aggie Saves

    I think renting out an extra room is a great way to gain some additional income. I’d definitely draw up a pretty specific rental agreement beforehand though.

  10. Josh @ Live Well Simply

    The loss of privacy would be a little tough to get used to, but definitely a great way to make extra cash!

  11. I have considered renting out a room but the girlfriend says no. I do agree with her that it would make being home much different and we aren’t in a spot where we need the extra money so I agree with her. Now if something happened and we had to I would be willing but I’m betting she wouldn’t.

  12. Frugal Portland

    I rented a room in someone’s house and had a mostly negative experience. I found that I was the one doing all the cleaning and the people I rented from didn’t seem to respect my desire for a quiet home.

  13. krantcents

    Crystal, you are a very brave person! I would not even consider a duplex or triplex because I do not want a tenant that close.

  14. Jenna, Adaptu Community Manager

    What about utilities? Factored into rent or separate?

  15. Crystal @ BFS

    @Travis, enjoy your alone time!

    @Michelle, sorry. 🙁

    @Steve, sounds awesome!

    @Call Me, I watch a lot of Criminal Minds…I guess I figure I can weed out the weirdos. Plus, I think if someone ever wants to get me, they will. I try not to think about that too much.

    @Daisy, yeah, they usually stayed in their room. And we are usually in our room or office, so doors help.

    @Little House, privacy is nice but money is nicer. 😉

    @Linda, I should charge hubby rent, lol. Glad you had mostly positive experiences!

    @Careful Cents, yeah, and we honestly charge quite a lot comparably, BUT they get a two-vanity full bath with a linen closet, a 10×15 room, above the garage storage space, laundry, all utilities, and shared living spaces and kitchen. So we don’t feel too bad at all for charging as much as cheap apartments.

    @This Aggie Saves, all details are in the lease and the roommate agreement (an unofficial document that states out what we expect and what they can expect from us). 🙂

    @Josh, we’ll still have privacy during the day while they work and go to school. 🙂

    @Lance, yeah, it stinks since both people would have to be open to it.

    @Frugal Portland, well that just sucks. We are the definition of a boring married couple and we have a maid come in biweekly, so our tenants usually don’t have much to put up with.

    @krantcents, 🙂

    @Jenna, for one tenant, we split the utilities and charged lower rent. But it was a pain, so we just charge a solid amount and cover all of the utilities ourselves.

  16. Squirrelers

    You guys are brave. I personally wouldn’t do that, of course with kids there is no way in the world I’m letting people stay in my place. But even otherwise, I don’t think I would.

    Having said that though, there’s a value to risk taking, and you’re getting some good money for it. If it works for you guys, you’ll be richer for it!

  17. Squeezer

    I always had awkward experiences with roommates, even though it was several years ago when I had any. Pretty much all of them moved back home to their moms and dads. And I wasn’t even charging that much, $350 which included rent, utilities, and internet. All they had to provide was their own food, they even got a parking spot in the garage.

  18. Kris @ BalancingMoneyandLife

    I have to thank you for taking the time to answer my questions! We’re posting out ad as soon as we get back from our vacation (May 30) – you’re right, privacy is nice, but money is nicer!

  19. This is an interesting idea about how to make some extra cash. I mean, if you have the space (especially like you, with the 2nd bathroom) this seems like a good way to earn some money off the extra space you don’t use. If you only have one bathroom however, or if your bedroom is located right next to the one the tenant would be staying in, it may get a little awkward. The other thing I’ve heard about is couch surfing. This is when people traveling are looking for places to “crash”.I’m not sure if they pay anything though, and this may be more of something thats done in Europe, but its along the same track.

  20. Vincent Turner (@vinaeco)

    This post has become really apt in San Francisco now where the ability to find somewhere to live for incoming tech people is out of control

    You have an amazing situation where you can literally find amazing, interesting & lovely people who need 1 – 3 months, will hardly be around anyway and are being paid well.

    I know of numerous people who are subsidizing 50% or even more of their normal rent or mortgage by doing this. (I know one girl who lives free by doing this)

    It’s not for everyone but the numbers are ridiculously attractive plus in the right area you are likely to meet some fascinating people.

    I’d say try it, use airbnb so you have a really good chance of getting people who are cool, keep it short term (days/weeks to begin with)

  21. Crystal @ BFS

    @Squirrelers, not even to close friends? 🙂

    @Squeezer, sounds like they weren’t ready to live out in the real world…

    @Kris, let me know if/when you find someone!

    @Kelly, yeah, sharing a main bathroom would not be an option for us. I have heard of couch surfing but haven’t tried it yet.

    @Vincent, yeah, renting out just room pays for our mortgage and then we only have to cover property taxes, insurance, and maintenance stuff. 🙂

  22. damsel

    I have a question:
    Why do people expect you to pay them more than half of what it costs to live in an entire apartment for a usually less than 12×12 room and a few privileges such as sharing a bathroom with strangers? It strikes me as taking advantage of renters and expecting them to pay off a mortgage they get little out of. Sure we save a bit and have a roof over our heads, but in the long run, we don’t benefit from helping you pay your mortgage.

    On top of it, they want you to pay a month’s deposit, which, in theory I understand, but in one month, I’m paying what amounts to a 700 sq.ft. apartment.

    Something ain’t right here, and I think renters are being taken advantage of. Seems to me that no one should be charging more than $250-$270 month including utilities in an area where apartment rents begin at $700.

    What am I not seeing here?

  23. Crystal @ BFS

    @Damsel, I can’t speak for other people, but we rent out a spare bedroom (10×15) for $600 a month (utilities included). That is about 50% of our mortgage and property taxes after we take out the money for extra utilities. But that is not how we chose the rent. We chose the rent based on what amount of money would make us happy enough to share our space. A roommate is a bother sometimes and if we weren’t bringing in $600 a month, we would rather have our space to ourselves and use the bedroom for guests. I mean, for $300 a month, I would be pissed when the one comes banging up the stairs when he is in a hurry or bangs around the kitchen without thinking of others. Or I’d lose my mind every time a light or fan is left on with no one in the room.

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