Room rentals? Why would you want to make your home into a boarding house? Maybe you shouldn't. I enjoyed having people living in my house, and most of them became friends. On the other hand, you might not like that arrangement. I hated being a landlord when I owned rentals that were not my home. Each of us is different.
Consider Your Room Rental Options
You don't necessarily have to live with the room-renters, so consider all the options available. You could do any of the following:
1. Rent rooms in your own home and share common space with the renters. This is what I did for several years when I was single, and it worked fine for me.
2. Partition your home so you can rent rooms without sharing common space. You'll need at least two bathrooms, and separate entrances to make this work.
3. Include an efficiency apartment for yourself, so you can have privacy, maybe sharing a laundry room with the renters. This is what we did at the time I got married. It also opened up one my former bedroom, increasing the rental income as sufficient to pay for the new apartment in less than a year.
4. Buy a house just to rent it out by the room. This can be an excellent way to get cash flow out of homes that might not otherwise be such good investments.
5. Sublet a room in the apartment you rent. That is if it is okay with the landlord, it can be a means to have the funds for a better apartment, or to get past monetary hard times.
6. Use room rentals as a way to have the funds for a house payment. In case you are having issues buying a home for the reason that you can't manage to pay, you can buy a home with additional rooms and rent them out.
Consider the Money In Renting Rooms
The money you can charge for rent will differ significantly in different parts of the country. Here is what a mobile home in a small town in Denver, Colorado (couple years back):
Small Bedroom: $65 weekly multiply by 52 weeks equals $3380 per year.
Medium Bedroom: $75 weekly multiply 52 weeks equals $3900 per year.
Large Bedroom: $85 weekly multiply by 52 weeks equals $4420 per year.
Possible Annual Income (I often had a couple weeks opening): $11,700 per year.
This was a home that I lived in, don’t forget. I added all utilities in the rent, and I tracked my expenses carefully. Including the refrigerator, repairing the heating system, and roof, as well as garbage collection, utilities, cable television, property taxes, local phone service and insurance, my costs the last year I had the house, was $3,900 (I had already paid off the $253/month mortgage).
How do you find out a profit when you live in the home? Renting rooms in my home perhaps added $300 or so to the annual costs. Heating was almost the same cost, as was taxes, garbage collection, insurance, cable television, and phone service. A bit more and tear and a little more electricity were the only real additional costs. In other words, almost all the extra income was profit. Or if you want to view it in another direction, I lived for free and had $7800 income from the home I lived in.
Do you want to have thousands of dollars of extra income every year? What would you do with that money? Think about that, and you have the answer to why you should rent rooms.