If you have a spare bedroom with an attached bath in your home (or above your garage…hey, it worked for Fonzi), subletting it can be a great way to bring in a steady stream of extra cash. It can also turn into a nightmare if you rent to the wrong person, but we'll talk about how to avoid that in a minute. Subletting is simply the act of renting out a room in your home to another person. They pay you rent, usually at a lower price than they'd pay for a full-sized apartment. Subletting is not for everyone, and you'll want to give it some serious thought if you still have children at home. But if you find the right sort of tenant, it can be a great money-making opportunity.
Setting Up the Room
You'll want to have a room that's very presentable for a sub lessee. This might take some minor remodeling, like a new paint job, but it's worth it to attract renters and charge a good price for the room. A bathroom is a big necessity if you're subletting, and it might be worth the investment to have one installed. For example, if you have a guest room in the basement, you can have an attached bathroom put in for the renter to use. It will increase the value of your home, and the bathroom will pay for itself over the course of about a year of subletting the room. Once the room is ready, you can start advertising your sublease on Craigslist and other sites.
Conditions for the Lease
Get a signed contract with any person you agree to rent a room to. This can't be stressed enough. There are some important things you have to address in addition to the amount of rent. For example, your sub lessee will need to eat, so will you allow them to have a microwave and refrigerator in their room? If not, will they eat with your family? Clearly spell out the arrangements for things like this. Do you allow pets or smoking? Is it a month-to-month lease, or a one-year contract? How will any damages to the room be paid for? Will you have curfew restrictions or noise restrictions? What about Internet access, phone access, cable TV and other amenities? Research everything that a landlord in your state would include in a lease, and make sure you have these things defined in the lease agreement. Have the renter sign and date it before they can move in.
How to Do a Background Check
Everything is online now, so do your due diligence to research any potential renter. You should obtain their date of birth and other contact details when they apply to sublet a room from you. Then you have a couple of options. You can purchase a paid background check online, which will cost $10 to $15, or you can do the research on your own. What follows are some easy suggestions to check a person's background for free.
Start with the national sex offender registry at www.familywatchdog.us. You can research any potential renters by name or address on this site. Most states publish a sex offender registry as well, which can be searched by first and last name. Court records are in the public domain, and every state publishes these online. You can find your state's records by simply typing in your state's name and "court records" in a search engine. Once you go to that site, you can enter the renter's name in and see if there is an arrest record that matches up to the name and birth date. Some cities publish mug shots of people when they're arrested, like www.boisemugshots.com. These sites are very popular and often turn up on the front page of search results when you type in a person's name.
Also do a simple Google search of the potential renter's name. You'd be surprised at how much you can learn about a person's character by viewing their Facebook and other social media pages. This can be a way to weed out potential "problem renters," if you find something about them that makes you uncomfortable.
Finally, ask for some references from them, such as an employer and former landlords. Don't do like some landlords do and simply ask for references and not call them. Take the time to place the calls and talk to the references.
What to Charge
Figuring out what to charge for a sublease is sometimes the biggest challenge. There are a couple of ways to do this. One is to just pick a price that you think is fair. Choose a number that's lower than what a person would pay for a studio apartment in your town. Another option is to measure the size of the room you're renting, and figure out what percentage of your home it takes up. If the room makes up 10 percent of your house, you could charge 10 percent of your mortgage, plus a little extra for utilities.