Renting Out A Room In My Home

I live in San Diego, California.  As such, the cost of living here is very high.  San Diego is one of the hottest markets in the country.  Two years ago I moved into 2 bedroom, 1 bath, 975 sq ft apartment for $1050 with my fiancée.

As you can imagine, this cost takes up a huge part of our budgets.  To lessen the load, I decided to rent out the 2nd bedroom.  This can be a great way to save money; money that can be invested to work for you.

Here is what I did:

I advertised the room for rent in Craigslist for San Diego.  If you have not heard of Craigslist, check it out: Craigslist.  It is a message board in which you can find jobs, rentals, and used goods.

Back to the story…  I listed the room for $350, which is 1/3 of the apartment’s rent.  This is a steal of a deal in San Diego.  After a few hours of being posting I had received 40 replies and had to take the ad down.

I sorted through the replies and choose a handful to interview.  On the third interview I found the perfect roommate and rented the room out to him on the spot.

Here are some tips and observations that I gained from my room renting experience:

- Set your rent a little below market value.  This will allow you to choose the pick of the litter from the renter pool.  Everyone will be scrambling to get your room.  For renters price is the #1 consideration.  For the rentee, the roommate is the #1 consideration.

- Obviously you want to get as much money for the room as possible.  But, this is only half of the game.  You also want to keep the room rented as much as possible.  If the room goes unrented, you will quickly lose any gains you would have from getting a higher rent.

- Trust your gut instincts on people.  When you interview potential renters, they will be on their best behavior.  If you have a gut feeling, go with it.  If you don’t have gut feelings, work on developing one.  My gut is right the majority of the time.

- Make sure you do a background check on anyone you rent to.  You don’t want to rent to someone who has credit problems or who has a record.  The eviction process can be very slow, time consuming, and costly.

- Set up rules for the home.  You need to let the potential renter know straight up what the rules are.  Do they have access to your kitchen and TV?  What about guests, pets, drugs and parties?

- Sign a rental contract with the renter.  Make sure the cost of rent, deposit, rules, and move out policies are in there.

The renter turned out to be a great roommate, and we saved hundreds of dollars during our agreement.  I used the money I saved to help start up my business.  It is important that you invest the money you save by renting out a room in your home.  If you just spend it all, you haven’t really gained anything for the future.

Written by admin on July 4th, 2006 with no comments.
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