What You Need To Know About Renting A Room In Your House

Are you thinking about renting out a room in your house to make extra money? We owned a house before we started traveling full-time, and over the years we had four different roommates. We were able to rent out an extra bedroom and the finished basement to our roommates, and it was a good way…

Michelle Schroeder-Gardner

Last Updated: June 5, 2023

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Are you thinking about renting out a room in your house to make extra money?

renting out a room in your houseWe owned a house before we started traveling full-time, and over the years we had four different roommates.

We were able to rent out an extra bedroom and the finished basement to our roommates, and it was a good way to make extra money. 

While having roommates is not always perfect, the extra money we made over the years was really appreciated. It helped me pay off my debt and save some money.

And, I have experienced renting a room in a house on both ends.

Before I bought my house, I rented a spare room from someone else, and the roles were flipped.

While renting out a room involves some work, it is a somewhat passive source of income that can help you bring in some extra money without too much effort.

Making extra money by renting out a room in your home can have benefits such as:

  • Having more money to pay off your mortgage sooner
  • A roommate can watch your pets when you’re on vacation (in fact, I know of several people who have roommates for this very reason, and they give a discount to qualified roommates)
  • You can stop living paycheck to paycheck
  • Early retirement may be possible
  • You can diversify your income sources

While renting a room in your house most likely won’t make you rich, it may earn you a good amount of side income.

I know of a few people who have rented out several rooms in their house to roommates and they’ve been able to completely pay off their mortgage with that extra money.

According to Zillow, 30% of the U.S. adult population lives with either a roommate or parent. And, that has increased over the years. In some places, such as New York City, Los Angeles, and Miami, the percentage is over 40% of adults have roommates.

That’s a lot of people who have roommates!

There are many things to think about if you are interested in renting out a room in your house. It’s not an easy decision and will require some thought. Some people will love the extra cash they make by having roommates, and some people might find that they aren’t meant to live with others. 

There are many things you can rent to make extra money, and renting out a room is probably the biggest and most consistent cash flow of things you can rent.

Side note: This post is about renting a room in your house on a long-term basis. If you are interested in renting out a spare room on a short-term basis (such as for vacations), I highly recommend you check out Airbnb. You can learn more at How We Reached Financial Independence Using Airbnb & Real Estate.

Content related to how to rent a room:

Below is what you need to know when renting out a room in your house for extra money.


What does renting a room include?

Are you wondering what exactly it means to rent out a room in your house? If you’ve never done it before, then you probably have questions as to exactly what it involves.

Renting a room in your home can mean a few different things. It may mean that you are renting out:

  • A bedroom within your home
  • Your full basement
  • Part of the basement
  • Mother-in-law quarters
  • Bedroom + living and eating areas, and so on

If you have a separate entrance, such as a basement with it’s own access door or mother-in-law quarters that have its own entrance, then renting it out will mean that you’ll have more space to yourself. Your renter will be able to come and go much more easily than if they have to use the main entrances in your house.

However, having a space with its own entrance isn’t as common, and you can still rent out a room without a separate entrance.

Many times when people get roommates, they are sharing their space and having another person live in their home. So, you’ll most likely be sharing the kitchen and living areas, and you may even be sharing a bathroom.

These are all things to think about when adding a roommate to your home. Are you prepared to have someone else use your kitchen, bathroom, washer and dryer, dining room, etc.? 

You should take some time to think about how you use your home and how renting a room in your house will impact your life. You may have to make some adjustments to your lifestyle, but they may be worth it for the extra money.


Is it legal to rent a room in your house?

Before you spend any more time thinking about this, you should understand renting a room in your house laws, meaning is it legal where you live.

I recommend checking the laws in your city or town if you’re unsure. Some places can be a little more strict than others, and you don’t want to get in legal trouble.

If you are renting your home from someone else, then it’s always wise to ask for your landlord’s permission before renting space in your house. Your landlord might want a new contract written up or they might even say no.

If you live in a neighborhood that’s in a homeowners association, sometimes they don’t allow renters either. It’s very wise to check with your HOA so that you don’t get fined.

And, you will have to comply with federal and state housing laws. The Fair Housing Act prohibits discrimination in housing because of: race, color, national origin, religion, sex, familial status, or disability. You can learn more about this here.


How much should you rent a room for?

Determining reasonable rent for a room is a hard part of the renting process, but it’s important to charge a fair rate for your space and what comes with the rental.

I highly suggest that you start with some research before assigning a random number to your spare room. I say this because if you price it too low, then you may actually end up costing yourself money in the end (due to wear and tear, utility bills, etc.).

Also, if you price the room too high, then no one may be interested.

You can determine the price of your rental by checking comparables. You should look at:

  • What the going rates are for other spare rooms in your area
  • What extras they may be offering (private entrance, garage or driveway access, backyard, etc.)
  • Whether there is a private bathroom included or not, and more

One thing you will have to determine is whether you will include utilities in your rental rate or if you will split all of the utility bills with your new roommate. You may lose money if you include utilities and your new roommate is wasteful when it comes to electricity, water, etc. By splitting utilities, your roommate will most likely be more mindful of what they are using. But, it can be easier to just include all bills into the monthly rent payment.

I’ve seen room rental prices from anywhere around $400 a month to over $1,000 a month, depending on the area, home, and amenities.

Remember, even just $400 a month is $4,800 a year. That is a good chunk of money!


How can I find renters for my spare room?

There are many places where you can advertise your rental.

You can:

  • Share with friends and family
  • Put a sign on your front lawn
  • Share the information on your personal Facebook page
  • Place an online ad on a website such as Craigslist

Everyone and everything is online now, so posting your ad online will most likely be your best choice.

Always be honest with your listing. You should be honest about how big the room is, what rooms come with the agreement, if there is a separate entrance, and more. Also, be sure to include pictures of what is included.


Should I be renting out a room in my house to a friend?

All of the people who have rented a room from me have all been friends or family, and they were all a good fit for us. Wes and I knew the people were looking to rent a room, and we had extra space in our house that we could rent out for extra money.

While we had a positive experience, I have heard about horrible experiences renting a room to friends or family. It might be someone who thinks they don’t need to take the rules of the agreement seriously, that it’s okay to be late with rent, and that they can make a mess.

In many of these situations, it hurt the relationship between the people. 

My best piece of advice is to be upfront with your rules and expectations, and tell your friend or family if there are any issues as soon as they come up.

However, if you’re worried about hurting your relationship, then you may want to avoid it all together.


How can I make sure it’s a good fit with my future roommate?

You probably don’t want to take any random person when renting out a room in your house.

So, always conduct interviews just like you would if you were renting out your whole home.

Here are some things you should ask about when interviewing a potential roommate:

  • Do they have a consistent job
  • Their recent living history and why they need a new place to live
  • Their work schedule (like, if they work the night shift while you work a normal day schedule)

Conducting interviews is important because you can learn more about the possible roommate and determine if the two of you will get along. You will be living within feet of them, so this is a very wise step to take. 

I also recommend asking for references, as this is what a landlord or property manager would do when renting to a new person.

You can even do a background check if you would like as well. After all, you will be living with them!


Should I set rules with my roommate?

Before your new roommate moves in, it is always a great idea to go over the rules and expectations for living together.

This can help you avoid misunderstandings and arguments, and you can even create a contract that covers all of these things.

Some of the things you may want to talk about and put in a written contract include:

  • The monthly rent amount
  • The date that rent is due each month and how it is to be paid
  • The length of the rental period
  • Whether or not they can have guests, parties, sleepovers, etc.
  • The noise level that is allowed
  • Cleaning duties
  • Which areas are off limits
  • Smoking policy
  • If pets are allowed
  • Where they are allowed to park
  • How to split bills and costs, such as utilities, toilet paper, trash bags, and more

And the list goes on. I recommend talking about this stuff as far in advance as possible so that there are no surprises on either side.


Do I have to pay taxes if I rent out a room in my house?

I am not a tax expert, so I would rather point you to tax professionals who knows these answers from a legal perspective.

Two resources that can help answer this questions are:


Summary – Should I rent out my extra room? What do I need to know about renting a room in my house?

As you can see, there’s a lot that goes into renting a room in your house. While it can be somewhat passive once you have the person actually living with you, setting it up and preparing to find someone isn’t always an easy task.

But, that doesn’t mean that it has to be impossible.

Think about both the positive and negative impacts it may have on your life. The biggest positive is that you can make extra money renting a room in your house. You may be able to save more money, stop living paycheck to paycheck, and pay off debt.

The hardest part is that you will have to get used to living with other people in your space. And in rare cases, you may end up with a roommate who doesn’t want to pay rent or makes a mess. This doesn’t happen often, but you should be aware of it.

Still, plenty of people each and every year find roommates and successfully live with them.

Whether or not you rent a room in your house is up to you. I’m so glad we had people renting from us over the years, and I would do it again if I needed to.

Are you interested in renting a room in your house for extra money? Why or why not?

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. Rupal Srivastava

    This is so helpful Michelle. I have been thinking about renting a room in my home for some extra cash. Thanks for all the valuable tips.

  2. Oferte Carti

    I too advice not to rent the room/house to friends or relatives.. it’s just not going to end so well being involved professionally and personally at the same time.
    Thanks for the tips!

  3. I’ve also considered renting out a room to help offset costs. As a roommate in previous places, the most important aspect is finding the right roommater personality fit. I feel like that’s a worth a whole blog post itself. lol


  4. Kevin

    Thanks for such a comprehensive post. For me, they key to renting a room is to have a set up where the tenant has their own enterance. But for those situations in which that is not possible, establishing a lot of structured rules can certainly help. If you leave something up to interpretation, you are going to leave yourself open to unnecessary drama.

  5. Great article, Michelle. My partner and I have been thinking about renting the spare room for a while and this helps a lot! Thanks.