Renting a Room in Your House in Retirement

6 things to think about before renting a room in your home

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If you need a little extra money in retirement, one option is to rent a room in your house. For most of my own time as a homeowner, I have rented rooms in my house, so I think it can be a great way to bring in some extra money. Here are 6 things to think about before you rent out a room.

1. Know why you are looking to rent a room

There are many reasons people rent rooms in their house and not all of them are financial reasons.

The extra money may be helpful, but are you also looking for company or someone to share responsibilities with?

When I had roommates one of the wonderful benefits was a built-in pet sitter. When I traveled for work or to see family, I never had to kennel my dogs. My roommates helped with chores like taking out the trash, getting the mail, and cleaning. In addition, as my roommates were usually good friends, their company also provided a built-in sense of community. We often shared dinners on weeknight evenings and breakfasts together on the weekends.

If you are getting a roommate solely for financial reasons that may lead you to a different arrangement than if you are looking for company, help with household chores, or someone to pet sit while you travel in retirement. It may also lead to a different rent rate. Get clear on why you are considering renting a room and that will help you find the right solution.

2. Temporary or part-time rental

When is the last time you had a roommate or shared your home with someone? Do you live in an area that has seasonal vacation traffic? These are good things to consider as you decide whether a temporary, part-time, or full-time room rental would be best.

If you haven’t shared your home with someone in a long time and are not sure how it will feel, you may want to start by renting a room on a temporary basis.

You might find someone who is separated from their spouse, new to the area, or a student.

Or you could seek out a roommate who travels a lot for work, or a business person who is coming to your location regularly on a project, or a pilot or airline attendant.

If you live in an area that gets seasonal traffic, perhaps you want to rent a room only over the summers, or during peak season.

Two of my rooms used to get rented to two pilots who flew a private jet into my area several times a month. Their employer paid for them to rent my rooms. It was less expensive for the employer, and the pilots enjoyed it far more than a hotel environment. For ​me, it was the same amount of rent as a full-time roommate, but they were only in town 6-10 nights a month. These situations are not always easily found, but you can keep your eyes and ears open and be ready if the opportunity comes up.

3. How much to charge

When deciding how much to charge, consider all of the following:

  • Square feet of the space
  • Do they have their own private bathroom?
  • Do they have their own entrance to their side of the home?
  • Are utilities included (wireless internet, cable, gas, electric, water)?
  • Does your home have extras like a pool, hot tub, house cleaners, and lawn maintenance service?
  • Is smoking allowed?
  • Are pets allowed?
  • Are you located in a desirable area?

See what the going rate is in your area for spaces like yours. Check out listings on Roomates.com and look at Craigslist under the ‘housing’ then ‘rooms and shares’ section to see going room rates.

When you are pricing your room, don’t underprice unless there is a really good reason to do so. Having an extra person causes extra wear and tear on all shared areas of the house. Make sure you rent to someone who can afford to be in your space. (You can require a credit check which can help you identify and weed out those who might be problem payers.)

What about renting on trade? Once I let someone stay with me on an arrangement where they were supposed to help around the house. It was a frustrating experience. If someone is supposed to watch the pets or do chores in exchange for all or a portion of rent, make sure you have spelled out the expectations clearly.

You’ll also want to look into the tax issues of renting out a room in your house.

4. Finding the right person to rent to

I’ve been lucky to find most of my roommates through someone I know. I think that is the best way to start, but it doesn’t mean it will always work out. This article How to Select the Right Tenant for Your Property provides great tips on some common sense things you want to do, such as a credit check and criminal background check, and what to look for on these items.

If you can't find someone through people you know, you can run ads on the two sites mentioned earlier, Craigslist and Roommates.com. If you are looking for a temporary or seasonal roommate, you might consider a listing on VacationRentals.com or VRBO.com.

If you are targeting someone who travels you might try finding contacts at your local airport or major businesses in your area to find the best ways to reach your target roommate.

In addition check out the tips in the article The Roommate Nobody Wants to Live With, as it provides good practical considerations about things like schedules and cleanliness. After reading the article you should put together a list of interview questions.

5. Setting the house rules

There is nothing that will cause problems faster than unstated house rules. I can tell you from experience, what is common sense to you, is not common sense to everyone. Do not expect your new housemate to read your mind.

Think about your living environment and how what bugs you. Do you expect all dishes to be immediately washed or put in the dishwasher, or is it ok if it is done by the end of the day, or the next morning?

Is loud music or TV ok, or do you expect it to be quiet after 10 p.m.?

And what about company? When I was a renter, I shared a rental home with a divorced mom who grew to be one of my best friends. The first time we met she said she had her daughter who would be with us every other week and she expected there would be no male sleepovers anytime her daughter was visiting. What a great way to lay out expectations up front.

I’d suggest you put your house rules in writing. Then have a friend read them to make sure they sound appropriate – if you sound like a parent, a nag, or a military general, you may have trouble finding a roommate willing to give it a try.

Get it in writing

I like the idea of a signed room rental agreement that spells out the terms of the agreement, any deposits, the monthly rent, and what is or is not included. I suggest the house rules be signed also. I have personally never used a written agreement, nor have I needed it, but if I were to rent a room in my home in the future, I would use one, just in case. If you have found the right person to rent a room to, the written agreement will never be needed.