Renting out your extra room or DSQ sounds like a great plan to earn you extra money but it comes with responsibilities you might not be ready to handle.
You’re probably savvy enough to know that you should collect a security deposit from your tenant before they move in to cover any potential damage to your property that exceeds normal wear and tear. You might expect and be understanding of accidental damage and you’ll probably collect a sufficient deposit to cover foreseeable events.
However, sometimes tenants cause massive damage to the properties they rent. It could be thoughtless or accidental. However, just because the damage wasn’t intentional doesn’t mean it won’t have a major negative impact on you.
Your homeowners’ insurance will probably cover the financial losses. Although, it won’t compensate you for the time and stress of making your home more secure or having it rebuilt and it can’t replace any sentimental losses. Your tenant could also introduce bedbugs or roaches to your property, which can be costly and difficult to get rid of.
What’s more, sometimes tenants will intentionally vandalize your property and steal from you. In some nightmare situations, landlords have discovered that a tenant was running a drug operation out of their property. In these worst-case scenarios, it may be necessary to file criminal charges and/or sue in court.
You Could End up Breaking the Law
In an attempt to protect tenants against unscrupulous landlords, landlord-tenant law contains many pitfalls that even the most conscientious landlord can fall into if he or she is not aware of the rules. Here are some areas where you might slip up:
- Failing to provide proper advance notice or obtain permission before entering the tenant’s unit, thus violating the tenant’s privacy
- Failing to provide housing that is safe, habitable and in good repair. Upkeep and repairs that you might be inclined to let slide when they’re only affecting you can become potential liabilities when a renter lives in your home
- Renting a unit that contains mold, which can make a tenant sick
- Violating city housing codes. For example, some locales limit the number of people who can occupy a property based on square footage and/or the number of bedrooms it contains
- Failing to provide or maintain promised amenities, like a swimming pool, therefore violating the terms of the rental agreement
- Charging a security deposit that exceeds state maximums, using it improperly or failing to return it within a required timeframe when the tenant moves out
- Failing to provide sufficient heat or air conditioning
At best, these mistakes could simply cause you to lose your tenant. At worst, you could be sued and lose. Landlord-tenant laws are state-specific. Make sure to read up.
Your Renter Won’t Leave
You probably won’t want to rent out part of your home forever. If your family situation changes – say, you decide to have children or you want an elderly parent to move in – you might need your renter to move out.
Another likely possibility is that at some point, you’ll be able to pay the full mortgage comfortably and you’ll want your privacy back. Sometimes a particular renter hasn’t technically done anything wrong but they’re just not a good fit personality-wise. Sometimes a tenant will stop paying rent but keep occupying your property.
Most renters are decent people who will move out when they can’t pay or when their lease expires, but sometimes a renter won’t leave when they should. In these cases, you’ll have to go through eviction proceedings.
Eviction laws are strict and landlords must follow them exactly for an eviction case to stand up in court. Proceedings can be time-consuming and costly – you may have to hire a lawyer.
The Bottom Line
Regardless of the reason for choosing renting out part of your property, there are important pros and cons that all would-be live-in landlords should consider before taking this leap. (Knowing your type of mortgage also helps in deciding whether renting is viable).
See Also: A landlord Guide for First Timers
