If you need extra cash, you may be able to turn to your home for help. Renting out a spare room can provide very good income — perhaps $450 to $600 per month, though this varies by region and room quality. First step: Check the rooms-for-rent listings in your local newspaper classifieds or online at Craigslist.org to find out how much other home owners are asking in your area.

Though renting out a room is a potential income source for any home owner, it’s most likely to pay off if…

  • You can offer a room with a private bathroom and/or private entrance.

  • Your home is located near public transportation.

  • Your region has employers that hire temporary and/or seasonal employees, such as colleges and universities.

    • SELECTING A TENANT

    Renting out a room means inviting a stranger into your life. The wrong tenant could make you feel uncomfortable… rob you… or fail to pay rent. Strategies for finding the right tenant…

    Work with a nonprofit home-sharing organization. These local organizations match home owners with room renters, usually for free. They have experience spotting potential problem tenants and even might conduct background checks on prospective tenants.

    Links to home-sharing organizations can be found on the National Shared Housing Resource Center’s Web site (www.nationalsharedhousing.org). Click the “Directory” link, then search for programs in your region coded “MU,” for “Match-Up Program.”

    Contact employers in your region. Companies that hire temporary employees or that transfer employees to the region from other branches for temporary assignments sometimes keep track of local housing options.

    Contact local universities’ housing departments. They might know of graduate students or visiting professors in need of rooms for a semester or longer. Contact school principals. Schools sometimes hire temporary replacements from out of town when teachers take maternity leave. Contact hospital human resources departments. Hospitals often hire temporary nurses, sometimes from overseas.

    Contact local houses of worship. Ask if they know any trustworthy people in need of affordable housing.

    Insist that a potential tenant supply proof of stable income, such as pay stubs. Also get his/her employer’s contact information so that you can get a reference. And be sure to get at least two other references, including one from a previous landlord.

    If you want to avoid tenants who have criminal histories, lean toward applicants in fields such as teaching or nursing, where background checks and drug tests are the norm. If you want to conduct your own check, search online for “background check” to find a company. Be sure to have the renter’s Social Security number so that you are checking the right person. To see if the person is a sex offender, go to www.nsopw.gov/core/publicregistrysites.aspx.

    Don’t wait until the last minute. Home owners often wait until their financial situations become desperate before renting out a room. This desperation forces them to accept almost anyone who knocks on their door. Better to advertise your room for rent several months before your financial situation becomes tight so that you can be selective.

    HOUSE RULES

    Home owners should explain the house rules to would-be tenants before agreeing to let them move in…

  • Identify the sections of the house and grounds that are off-limits to the tenant. Example: The master bedroom, den and the garden on the east side of the house are private areas.

  • Explain if and where smoking is allowed. Example: Smoking is not allowed in the home, but it is permitted on the back patio.

  • Explain whether pets are allowed. Example: Cats and dogs are not permitted, but smaller pets confined to cages or aquariums are acceptable, subject to the home owner’s approval.

  • Describe where the renter can park. Example: The renter can park a vehicle on the driveway’s left side, leaving room for other vehicles to pass.

  • Explain whether overnight and daytime guests are allowed. Example: Daytime guests are permitted in the renter’s private room but not in the home’s common areas. Overnight guests are not permitted.

  • Lay out the tenant’s access to the house TV and other electronics… the refrigerator… the washer/dryer… and the house phone. Example: The tenant can use the TV and stereo between 10 am and 10 pm if they are not being used by the home owner. One shelf will be made available in the refrigerator for the tenant’s use. The tenant has the right to do two loads of laundry per week. The tenant cannot use the house phone without specific permission from the home owner.

  • Set certain hours as “quiet time.” Example: The tenant agrees to keep noise down between 10 pm and 8 am.

  • Explain whether the tenant has any right to change the thermostat… and, if not, at what temperature the home will be kept. Example: The home will be heated to at least 68° in the winter and cooled to stay below 75° in the summer. The tenant cannot change the thermostat without permission.

  • List any restrictions on food storage, preparation and consumption in the tenant’s private room. Example: The tenant can eat in the kitchen or in his private room, but all food will be stored and prepared in the kitchen. No hot plate, microwave or refrigerator is permitted in the private room.

  • Explain who is responsible for household utility bills. Example: All utility bills will be paid by the home owner. (Room renters generally prefer the certainty of a fixed charge.)

    • ROOM RENTING AND THE LAW

    Five legal considerations…

    Landlord law. A long list of state and federal laws govern the landlord/tenant relationship. Examples: Many jurisdictions have laws restricting a landlord’s right to evict a tenant or enter a tenant’s room or apartment… limiting security deposits and fees… and requiring the disclosure of lead paint and other health risks.

    The Web site of the US Department of Housing and Urban Development offers details for federal fair housing laws and links to sites that cover state laws (www.hud.gov, click “Rental Assistance” under “Topic Areas,” then read the sections under “Your Rights and Responsibilities”).

    Exception: If you are renting out a room in your own residence, you are not subject to the same strict federal antidiscrimination laws that other landlords must follow. You could choose to rent only to someone of your own gender.

    Zoning laws. Some towns and neighborhoods have rules limiting the number of unrelated people who can live together under one roof. These rules typically do not prevent home owners from renting out one room to one unrelated roommate, but it’s worth checking with your town offices.

    Taxes. The rent your tenant pays to you is income that should be reported to the IRS. However, you likely can deduct a portion of your home’s depreciation… home repair and maintenance costs… utility bills… and homeowner’s insurance premiums from this rental income. See IRS publication 527, Residential Rental Property, for details. You can download it at www.irs.gov.

    Insurance. Contact your homeowner’s insurance provider to make sure that your policy will not be voided if you take in a tenant… and that you will be covered if the tenant causes damage to the home or is injured on your property and sues.

    Contracts. Prepare a written lease to be signed by both you and your tenant. Suitable forms can be found in do-it-yourself legal guidebooks… or downloaded from law Web sites, such as Nolo.com, typically for $10 or $25. This lease should spell out each party’s responsibilities, including the house rules… the amount of rent and the day of the month on which rent is due… whether a security deposit is required… and the terms under which the lease can be ended. Room-rental agreements typically allow either party to terminate the lease with 30 days’ notice.

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