How to Rent out a Room in Your House in 10 Steps

If you are a homeowner with extra space in your house, renting out a room to collect rent may seem like an enticing option to earn extra cash.
Renting out a room on your property requires careful consideration of legalities, financial implications, and interpersonal dynamics.
To help keep you out of potential legal trouble and start earning passive income, here are the complete steps to rent out a room in your house.
Note
If you’re a tenant looking to rent out a room on your current property to a new occupant, check our subleasing guide instead.
- Step 1: Understand Landlord-Tenant Laws
- Step 2: Check with Your Insurance Provider
- Step 3: Decide Which Room to Rent
- Step 4: Determine the Rent Amount
- Step 5: Prepare Your House
- Step 6: Make Your Listing
- Step 7: Screen the Tenants
- Step 8: Sign an Agreement
- Step 9: Document Income and Expenses
- Step 10: Actively Manage Your Rental Property
- Summary
Step 1: Understand Landlord-Tenant Laws

Once you rent a room to another party, you have established a landlord-tenant relationship. Understanding the landlord-tenant laws in your state and local area is the first step to a successful rental experience.
Landlord-tenant laws cover a wide range of topics, including the rights and responsibilities of both landlords and tenants, eviction procedures, security deposit regulations, and more. Specifically, these laws generally require the landlord to:
- Maintain habitable conditions. You must ensure the rental property is habitable and meets basic structural, health, and safety standards. This includes adequate water supply, heating, electricity, sanitation, and maintenance of common areas.
- Keep up with repairs and maintenance. You will be responsible for keeping the property in good repair. This includes fixing any issues with essential services (like plumbing, heating, and electricity) and addressing any wear and tear that impacts the tenant’s ability to use the property as intended.
- Provide security measures. These include locks on doors and windows to ensure the tenant’s safety.
- Comply with health and safety laws. You must comply with local health and safety laws, including regulations on lead paint, asbestos, mold, and pest control.
- Respect the tenant’s privacy. While you have the right to access the tenant’s private living space for inspections, repairs, and maintenance, most state laws require you to provide notice (often 24-48 hours, depending on your state) before entering, except for emergencies.
- Provide notice for rent increases and lease changes. Most states require landlords to provide tenants with advance notice of rent increases or changes to the lease terms. Clarify how rent increases or lease term changes need to be addressed in your room rental agreement.
- Disclose specific information. You may be required to provide tenants with specific information, such as lead paint disclosures, the identity of the property owner and property manager, and information about where the security deposit is held.
- Handle complaints and requests. You must responsibly and promptly address complaints and repair requests from tenants.
- Keep records. Maintaining records of all rental income, expenses, deposits, repairs, complaints, and room rental agreements.
In addition to landlord-tenant laws, you should also learn about your local laws and regulations, as there may be restrictions around renting rooms in your house, such as from your neighborhood association or your co-op board.
Step 2: Check with Your Insurance Provider
Like mortgage lenders, most homeowners insurance companies request that you inform them before renting a room in your house.
Note that basic homeowners insurance often does not provide adequate protection from any damages caused by a renter, as your property no longer qualifies under an owner-occupied or single-family insurance policy.
Look into landlord insurance coverage. It can cover the cost of repairs to your home or lost possessions while allowing you to recover any outstanding rent payments. In addition, it acts as liability insurance in the event of personal injury to your tenant and will help you offset legal fees should you ever be sued.
If you’d like to take additional precautions, ask your tenant to apply for renters insurance. It can be taken out in your tenant’s name and will protect their personal belongings in case of any accidents (e.g., a fire).
Step 3: Decide Which Room to Rent
While renting out a room in your property has certain benefits, it has some downsides you should consider.