The four basics of renting out your space

Wednesday, March 9th, 2011 By

Room for Rent

When you want to rent out a space, some easy research and simple steps can protect your wallet. Image: Flickr / dreamsjung / CC-BY-SA

With the collapse of the homeowner’s market, more and more people are renting. If you have extra space in your home, or even an extra living space, you can make money by renting that space out. Before posting your ads, there are a few things you should do to protect your wallet — and your sanity.

1 – Consider the local market

Before you try to rent out space, do your research. Take a look at newspaper ads, Craigslist, and online services for spaces similar to yours. Make an appointment with a few landlords and take a look at spaces similar to what you are renting out. Once you have made comparisons with similar rentals and considered how much money you need to bring in, set your rental price.

2 – Research the law

Every state, and some cities, have varying landlord/tenant laws. Even if you are just renting out a single room in your house, you should research these laws. Most areas have at least one landlord association that offers information on the basics of the law. Landlord/tenant law can dictate everything from what you need to provide in your rental to how much notice you need to give before entering the rented space.

3 – Consider credit

Not everyone has perfect credit. As a landlord, you need to think about whether you want to check the credit of your potential renters. A credit report indicates the history of a person’s finances and bill-paying. Running a credit report on a potential renter, however, will cost you between $75 and $100. You do not have to check credit in order to rent out, but you should be reasonably confident that your renters can afford what you’re charging. Checking references and employment history is the best way to gauge an applicant’s ability to pay.

4 – Deposits, leases and paperwork

You should never rent a space to someone without paperwork. Paperwork protects both of you, and it provides documentation that could be needed for financial transactions and even proof of residency. You can find standard rental agreements for your state online or through landlord’s associations; read through the agreement carefully and make edits as you see necessary. Even if you are friends with your renter, you should charge a deposit of some kind. If something goes wrong — no matter how good of a friend your renter is — cleaning up after a renter moves out can be costly, and a deposit can pay for that.

Even if you plan on just renting out a single room to a good friend, you should make sure to price your space appropriately, know the law, consider the finances of your renter and do the paperwork. If you do the work on the front end, renting out a space can be a relatively low-stress way to bring in extra cash into your wallet.

Previous Article

« Does Groupon hurt small business?

Groupon and other deep discount coupon websites are great for marketing. Small businesses should approach – but with some caution. The Groupon corporate logo. The subtext reads “Collective Buying Power.”
Next Article

Global food inflation starting to hit US grocery budgets harder »

Global competition for basic agricultural commodities is increasing pressure and causing higher food prices for consumers in the United States. food inflation

Other recent posts by bryanh

The no-so-hidden lifetime cost of a bad credit score

A bad credit score or a credit score report that contains errors can rob a person of thousands of dollars over a lifetime.
credit report errors

Clock is ticking on $1.1 billion in unclaimed 2007 tax refunds

Low-income taxpayers who didn't file for 2007 could have money coming thanks to the Earned Income Tax Credit ...
tax return

New research: More than half of Alzheimer’s cases misdiagnosed

A study found that the brains of 50 percent of the people diagnosed with Alzheimer's lacked the lesions associated with the disease ...
alzheimer's cases