renting a room in your home

Important Things to Consider When Renting Out a Room in Your Home

If you have unused space in your home, you might want to rent out a room in order to make some extra money. And while this seems like a less formal arrangement than renting a separate property to a tenant, there is still a landlord-tenant relationship involved, and there are laws that will need to be followed if you decide to do this.

There are a few different ways you can go about renting a room in your home. You could offer up the room as a long-term rental in which the tenant would be expected to occupy the room for several months or a year or longer. Or you could do short-term rentals, such as renting the room out for a few days or a week to travelers or those who visit your town for a special occasion or event. In this case, you might be planning on listing your rental on a website such as Airbnb.

Another issue to consider is where the room is located in your house and how much interaction you expect to have with your tenant. Your home may be set up where your tenant can rent a room and have a whole section of the house to themselves, which may include a bathroom, small living area, and even a kitchenette. On the other hand, this might be more of a roommate situation where you and your tenant will have access to some common areas of the house, such as the kitchen and living room.

However way you plan on renting out the extra room you have in your home, it is very important to protect yourself legally. This means making sure you are in compliance with state and local landlord-tenant laws, and that the rental agreement you create fully addresses your specific situation. If your rental is in Alabama, Davis, Bingham, Hudson, & Buckner P.C. is here to help. Contact our office today for a personalized consultation with one of their attorneys.

Helpful Tips to Follow When Renting a Room in Your House

Decide How Much Rent to Charge

Alabama does not have any rent control laws, so as a landlord, you are allowed to charge whatever you want for rent. This will of course be largely determined by many specific factors, such as the location of the house, the size of the room, the amenities that come with the room, and what is included with the rent (e.g., a portion of utilities, a parking space, etc.)

A good place to start is to check various rental websites for comparable rooms for rent in the area. You should also keep in mind that rentals are in fairly high demand right now. Home prices have been rising in recent years, which has made buying a house unaffordable for many people. This means that more people are looking to rent as well, and for those with a more limited budget, renting just a room is an attractive option.

Prepare Your Home for Nonrelative Tenants

When you are renting a room in your house to someone who is not a family member or friend, you need to be sure that your dwelling meets all safety and habitability standards. This means, among other things, securing all of your valuables (you may even want to consider putting your most valuable possessions in a safety deposit box at the bank), repairing anything that could pose a safety hazard, and installing deadbolt locks on each of the bedroom doors.

Obtain the Right Kind of Insurance

Before you rent out a room in your home, get in touch with your insurance agent (or call the company directly if you don’t have a local agent) and let them know what you are planning to do. It is very important that you add any coverages you need to ensure that you are protected against property damage and the additional liability that you are exposing yourself to.

Learn About the Tax Consequences of Renting Out a Room

When you rent a room in your house, the tax rules apply in very much the same way that they do for landlords who rent out the entire property. But there are some extra wrinkles in the way this type of arrangement is handled tax wise, mainly because you are only renting out part of your property and living in the other part. Speak with a tax professional to go over the tax laws and how they will apply to your situation.

Work Closely with Your Attorney on the Rental Application, Contract and Other Legal Issues

If you are looking to rent a room in your home, the ideal situation is to land a tenant who is honest, trustworthy, pays the rent on time, and keeps his/her part of the property in good repair. While there is never any guarantee that things will work out this way, you can vastly increase your odds of a favorable outcome by working with a reputable landlord-tenant attorney.

Your attorney will go over Alabama landlord-tenant laws with you, what your obligations are, and the potential issues that may arise with this type of arrangement. They will also help you by drafting a rental agreement that fully defines the boundaries and expectations for all parties, and they will advise you on how to properly screen rental applications and perform background and credit checks while remaining in compliance with federal fair housing laws.

For additional information on renting a room in your home or any other Alabama real estate-related legal issues, contact Davis, Bingham, Hudson, & Buckner P.C. by messaging us online or calling 334-821-1908. We look forward to serving you!

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