The obvious first step in renting out a room may be deciding which spare room to rent, or perhaps how much rent to charge. These might be very good intentions initially, but, as odd as it may sound, the first step in renting out a room does not have anything to do with roommates or which room to rent out.
So, then what is the first step?
Before starting any endeavor in life, the first step is almost always setting a goal. Renting out a room is no different. Without a goal to strive for, it’s easy to loose focus on why you started in the first place. Think of it as driving without a particular destination in mind. You’re simply driving for the sake of driving, and hoping you end up somewhere meaningful.
What Kind of Goals?
Sit down and starting thinking why you want to rent out a room. Ask yourself: Do I need the rental income to avoid debt? Do I need to pay off debt? If you recently lost your job or took on added debt, you might need to consider if you have a sudden need to make up for lost income or extra expenses. Surely, these are all good reasons to start renting out a room.
In my case, my goal for the rental income from my rooms was to pay for grad school out of pocket in order to avoid falling further into student loan debt. I eventually graduated. Now I focus my attention on paying off my high interest second mortgage. My goals changed throughout the years, but I still have a goal to strive for when I am renting out my rooms.
Why Have a Goal?
Not everything goes smoothly when you rent out a room. You may have a tough time finding roommates, or you could end up with some messy roommates. It’s helpful to remind yourself of your goal when you have to deal with these situations to get through these undesirable circumstances.
Plunging the toilet is one undesirable situation I sometimes find myself in. I could count the number of times I plunged toilets before I rented out my rooms, now I’ve lost count. But I constantly remind myself of the end goal to maintain my composure when I have to plunge the toilets or perform some other grotesque task.
Wrong Reasons to Rent Out a Room
Temporary Fix – Unless you’ve recently lost a job, along with your income, you should not live off the rental income from your rooms. Living off the rental income from a spare room after a job loss should only be a temporary fix until you can find another job. Otherwise, you may be in an adverse situation again when your roommate moves out.
Don’t Live Like Elvis – Rental income should not be used for living the high life of buying luxury goods or pampering yourself with services. The rental income could all of a sudden disappear, making you revert back to your old not-so-high lifestyle. Once you get accustomed to a certain lifestyle it will be difficult to revert back to your previous standard of living. Think about it: If you’re used to driving a high end luxury car, can you ever go back to driving a compact economy car? Don’t fall into this trap. [And don’t include it as part of your regular monthly income for the purposes of determining you household budget. You may take on added debt and then lose the tenant and the extra cash you were depending on.]
If you’re serious about renting out a spare room, spend some time thinking about the goals you want to achieve with your rental income. I’m talking realistic, practical goals such as paying off debt, as I’m currently doing. Take a walk outside and start thinking of goals you want to achieve with the rental income. If you already have a goal, then write it down so that you have a constant reminder of why you want to rent out a room.