We’re doing this right now (2 rooms rented, 2 rooms available), and here’s my tips:

- Meet them in person, find out their schedule, where they work, when they get paid, etc. These items will help you understand if they will fit with you.
- Parking, make sure you know where they can park, etc. When in a condo, see how much it would cost for a second parking spot.
- Timeframe, how long they plan on staying. A hidden cost there is how many times your going to have the room empty.
- How much they moving in? Make sure they understand they can use the “common areas”, but would prefer their stuff stay in their rooms.
- Kitchen space, we set aside a shelf in a large pantry cabinet for their food.
- Utilities, make sure to include utility costs and don’t be skimpy on your estimate.
- Legal: If you turn anyone down, make sure to put down in writing at the time the reason why. There are many laws restricting discrimination, make sure you lookup the ones in your area. I have only had one that I would have turned away (they didn’t contact me back after meeting in person) and it would have been her financial stability. I have a feeling though that if I had turned her down directly, she would possibly gone to court saying I was discriminating against her.
Taxes: It will be taxed as your standard income, just under another line (rental income).
Insurance: Talk with your homeowner’s insurance for details regarding accidents by your renter.

My wife and I have rented out rooms in the past. In addition to what “Sick of Debt” listed, we also had them sign a contract. This contract included the basic items (monthly or yearly length of stay, rent fee, etc.), but also included things like what are they allowed to use or not use (in the kitchen, refreigerator, stereo, TV, etc.), can they throw parties-notification, what about boyfriends/girlfriends, etc.). Some of the stuff seemed intrusive, but when you are sharing the place, each of you needs to know what is acceptable, expected, etc. In the end, the costs of having a poor experience could be higher than the costs of not renting the room.

Here are some more comments from the forums

Great points Sick of Debt & Jim!

In the past I’ve had pretty good luck with renters, and didn’t have to turn anyone down directly, so I haven’t had to deal with any legal implications (yet).

For taxes, do you need to pay increased social security on the rental income? (If I recall correctly, a standard employee income splits social security with the employer.)

Thanks,
Rogan

I have been renting 3 rooms in my house for almost a year now. Of the three, one is an original renter from the beginning, another has been with us for about 4 months and the third is newer. I have heard nightmares from others concerning renting property, but I have not had any problems insofar. I think it’s because the troublemaking type is not keen on living under the same roof as the landlords, therefore, I have more people that end up not wanting the rooms, but those who do are generally adults (such as divorcees paying child support)that have steady jobs and just need affordable housing. We all share the kitchen and there are three baths divided amongst all of us. My cost to furnish the rooms were minimal as I shopped around for good used furniture and my utilities have only gone up 100-200 per month (depending on the season a/c use etc.). I include all utilities (electric, gas, water), central heating and a/c, basic cable, washer/dryer access, and a Vonage phone line for all to share (apart from my own phone line). I placed cubby baskets in all baths with tenants room #’s on them to keep their hygiene products contained and I buy the toilet paper, dishwashing soap and cleaning supplies to keep the use and purchase fair. Everything else they buy for themselves including detergent. The additional income is great, my tenants are happy because they pay once for their bills and everything is covered and they still save some money. I ask that everyone take a minute each week to clean the bathroom or kitchen some, so it stays pretty clean since we all do something at least once a week. I had one tenant that couldn’t keep up with the rent, I confront her right away and she ended up leaving on her own. Like I said, living there too does a lot on it’s own to keep trouble at bay. It’s different when the landlord lives there too. One other benny of renting rooms is that when they leave, they often leave stuff behind they can’t take and though some of it is useless stuff to you, other things are valuable. Check your local area for renting legal rules (I also provide a keyed door for each tenant).