How To Rent Out a Room in Your Home


Insurance Ranked

- Updated April 14, 2023

How To Rent Out a Room in Your Home

Essential Steps To Renting Out a Room in Your Home

The way people rent, both short- and long-term, is constantly evolving. According to the Pew Research Center, 11% of Americans have used a home-sharing site to stay overnight in a private residence. This means that one in every 10 Americans has rented out space in someone else’s home, making room and property rentals a lucrative market to enter.

If you have an extra room, or you are moving to a new place and are looking to rent out your current home, then exploring this new source of income can have a massive impact on your life. However, before you take the plunge and rent out your space to a stranger, there are a few things you need to know.

Long-term Rentals vs. Short-term Rentals


Renting out a room in your home for the long term is a very different experience than renting it out for a short period. Each option has different strengths and weaknesses and requires different kinds of preparation.

Long-term Rentals

Long-term rentals would involve someone living in a room in your home for a longer period (perhaps signing a year-long lease). Who you decide to rent to could impact your daily life and the enjoyment of your home. This person will have their own bedroom, but the common living spaces such as the kitchen and living room will be shared between the two of you.

Long-term rentals allow you to develop a deeper relationship with your tenant, and can also provide you with a much more stable source of income. While you may make less than you would with short-term rentals, you will know exactly how much you are going to make each month and will have the stability and comfort that comes from having a long-term tenant.

Short-term Rentals

Short-term rentals normally last anywhere from one night to one month. If you are working through a site like Airbnb, you’ll need to provide cleaning services before each guest comes to stay, and you’ll have to be available for constant communication in case a guest has a problem during their short stay.

Short-term rentals can charge more than long-term rentals generally, but you are not guaranteed to have a tenant every night of the month. This means that while you have more earning potential, your income will vary from month to month, which might cause some financial stress.

Local Laws

There are a variety of laws that affect potential landlords. These laws are almost always specific to your local area and will change depending on where you live. If you are interested in renting out a room in your home, or renting out an entire property, you should look into local housing laws and local landlord-tenant laws.

Local Housing Laws

If you are opening your home up to potential renters and you have an application process, it is important that you read up on the Fair Housing Act. The Fair Housing Act protects tenants from discrimination based on race, color, national origin, religion, sex, familial status, and disability status.

It is also important that you follow any policies upheld by your local housing authority in regards to the state of the property and various safety and hygiene issues.

Local Landlord-tenant Laws

Every state has different laws regarding landlord-tenant disputes. For example, in California, tenants have the right to withhold rent in response to unsafe and unacceptable living conditions in their rental unit such as a lack of electricity or running water.

If you are planning to rent out a space in your home, you must understand the rights and responsibilities that you have as a landlord.


When you rent out a space in your home, the rent you receive from your tenant is considered taxable income. That means that tax season might become more complicated than it was before. However, that taxable income will be diminished by the deductions you will be allowed to make as a landlord.

According to the Internal Revenue Service (IRS), a landlord can make deductions for any ordinary and necessary expenses needed for managing and maintaining your property. You can deduct advertising, maintenance, insurance, and other regular expenses from your rental income, thus reducing the amount of income that will be taxed.


One of the most essential parts of becoming a landlord is educating yourself about the various types of insurance involved in running a rental property. Whether this is insurance that you will need to acquire, or insurance you’ll require your tenants to have, it is important to understand how these types of insurance affect your property and your business.

Homeowners Insurance

Your insurance needs will change based on what your living situation is regarding your rental property. If you are renting out a separate property that you do not live in, then you will need to sign up for landlord insurance instead of homeowners insurance. Landlord insurance provides an additional benefit of liability insurance, which can protect you in the event of an injury or accident at the property you own.

If you are living in a house and simply renting out a room, then you will need to get homeowners insurance. Homeowners insurance covers damages from a variety of sources. These damages can be caused by other people, such as acts of theft or vandalism. These damages can also be caused by weather, natural disasters, and acts of God, such as storms, falling trees, fires, lightning strikes, floods, and more.

Renters Insurance

Homeowners insurance protects the building itself, and the appliances within it, but renters insurance provides additional protection for the personal belongings of the tenant. Many landlords choose to require tenants to purchase renters insurance.

If an event such as a theft, or a disaster such as a fire happens, renter’s insurance will provide the tenant with compensation for the loss of personal belongings. It is important to remind your tenant that events such as flooding often require separate insurance.

Pet Insurance

If you are going to allow pets in your rental space, you might want to consider asking your tenant to purchase pet insurance. Pet insurance can cover the cost of a variety of health issues an animal might face. If you have pets and will be welcoming a tenant into your home, investing in pet insurance can help to protect your pet in a variety of situations.

Pet liability insurance is an add-on that would cover damage or injury caused by the pet. This could be damage to a person or to structures that exist on the property. While pet insurance is an added cost, it is a worthwhile investment for serious pet owners.



Providing thorough documentation is the best way to protect you and your tenant. This documentation can cover the state of the house, the expectations you have for the term of the lease, and more.

Leases and Rental Agreements

Writing up a lease or a rental agreement is not always easy. Many people find that it is best to purchase a template off of the internet to start from instead of starting from scratch.

You can also consult with a lawyer in your area if you want to make sure you have a thorough lease agreement for your tenant to sign.

Pre Move-in Inspection and Post Move-out Walkthrough

Once you have found a tenant, you should both conduct a pre-move-in inspection, filling out a form that takes note of every2 problem that might be found in the space. This way you and your tenant are aware of the state of the room or apartment at the time of move-in.

When your tenant moves out, you should also perform a walkthrough to see what damages may have been caused over the lease term. You may need to use a portion of the security deposit to make repairs if the damages are extensive.

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