A complete guide to renting out a spare room or a basement for extra money

Renting out a spare room or a basement can be a great way to help to pay bills, but there is a lot of things to consider.

Are you sick and tired of stressing about money all the time? Grab Free Monthly Budget Template and take control of your finances today.

I rented the basement for a year and to be honest I am not planning to do it again in the future.

It was a great tenant (a friend relative). I was very very lucky and avoided many problems. In this article, I combine my experience of renting out the basement and my friends renting out rooms in the house.

Some of you buy a house with a plan to rent out the basement and some of you came to this decision after hitting a rock bottom.

Largely I rent out the basement room because I needed an extra income to pay my bills.

READ NEXT:

• How to prepare for the financial crisis – Personal Contingency Plan
• Top 5 Retirement Concerns that I am Thinking About at 55
• 17 creative ways to make extra money on the side after 50
• Can you retire full-time in an RV in Canada?
• Retiring in a rural area in Canada. Everything you need to know.

So first I started to ask my friends to learn from their experience and it’s just happened that my friend’s relative just immigrated to Canada and needed a place to live.

So, I agreed.

I am not going to lie I was so scared. I had nothing prepared.

Let me explain the whole situation.

I own a two-bedroom little townhouse with a finished basement. My oldest daughter used to live in this (basically one room) basement.

But guess what? It has no door to close and no bathroom.

So, we had to share the kitchen and bathroom. Simply put we lost privacy.

But I was willing to put up with all of it just to pay my bills. It was easy money after all and he was a great tenant, quiet, polite and paid on time.

So first and foremost, if you want to rent out a spare room or a basement in the house you leave in, ask yourself.

Is Renting Out Your Basement or A Room A Good Idea?

The answer depends on so many things.

• Are you OK to lose your privacy?
• What if they still your valuables if you have any?
• Will they bring friends?
• Will they cook smelly food?
• Are you OK with an increase in your utility bills?
• Are you bold enough to ask questions, negotiate rules and ask for rent payment?
• Is it illegal to rent out your basement?

Just a few questions you should ask yourself. If you are single like I am you can ask a friend to be with you while you interview a potential renter. But better rent out the room only to a friend of a friend.

A great resource to read before you rent your basement here.

Below is what you need to know when renting out a spear room or a basement for extra money

Who Rents a Room?

There are many possibilities. I will mention just a few that I know from personal experience.

The most common candidates for a single room will be.

• New immigrants don’t have a job yet and have limited finances.
• Just divorced men.
• Student.
• Recent graduate.

Students can be loud and divorce men can start to build a bomb in your room (no kidding, happened to my friend).

Check out “How Renting Out Spare Room Can Backfire”.

Try to avoid renting to a family and always sign a lease agreement. I will write more about it in a second.

Questions to Ask When Renting Out a Spare Room or a Basement Apartment

You should never take a random person as your tenant when renting out a spare room in your house. Always ask a question the same way you would ask if you rent out an apartment.

Conducting an interview with potential tenants is important, to find out if they are not crazy, will pay rent on time and if you will get along. Especially if you will share some spaces in the house.

You can also do a background check if you like.

Samples of questions to ask.

• Where are they living now?
• Why they are moving?
• Do they have money to pay the first and last month’s rent?
• Do they have a car? Where will they park it?
• When are they planning to move in?
• How long are they planning to stay?
• Why are you leaving your current place?
• What is your monthly income?

Here is a link to a great article about questions to ask and red flags to look out for. “27 tenant screening questions.”

Research Before You Set a Monthly Rent

Don’t set your rent too low. You will attract renters with a focus solely on a dollar. To find a price for rent in your area just google it. Try to find room for rent close to your area and see photos of a place. Thing like a renter, is your room better? Set the price in the middle or close to a higher end of the average.

Think about utilities and do you want to include them or not.

Advertise That You Are Renting Out a Spare Room in Your House

There many places where you can advertise. It can be an ad in the newspaper, sign on a bus stop or online on a website such as Kijiji or Craigslist for free.

My favorite way to advertise is online, everyone and everything is online now.

Always be honest when advertised. How big is the room, will you include utilities in the price, will you accept pets or smokers? Does your basement have a separate entrance? Are you looking for females or males only, mention all of it in an advertisement?

Also, be sure to include pictures of what is included.

Always Set Rules When Renting A Room in Your House

Before your new tenant moves in to discuss the many things people usually fight about and write it in a contract.

Some things you may what to talk about:

• Can they have friends over? Can they have a party at your place?
• What noise level is allowed?
• What areas are off-limits?
• When should they pay rent?
• How will you share places? For example, refrigerator, bathroom, or kitchen.
• Who will buy toilet paper and garbage bags?

If you don’t want to share the kitchen, you can put a microwave and small refrigerator in their room.

Here is the link to the website with 39 Simple Room Rental Agreement Templates to download for free. Find one that you are comfortable with, print out sign two copies.

Basement Suite Rental Income Tax

It’ better to ask a specialist. You can find this (Canada) and this (USA) information helpful.

Also, don’t forget to let your home insurance know that you are renting out a room or a basement in case of a fire.

Collect all house improvement bills, you can deduct them on your tax return.

Would you ever think about renting out a spare room in your house for extra money? Why or why not? Write in the comments below. As always, I’d like to hear from you!

For all of the latest updates from the Blog and other ageless Beauty tips, I hope you’ll take a moment to follow me on Instagram!

❤Have a fabulous week and take care!

If you found “A Complete Guide to Renting Out a Spare Room or A Basement for Extra Money” post helpful, feel free to pin this image to your skincare board.