Is house hacking for you?
The rising costs of living have started a trend called house hacking. In yesteryear, this practice would be known as renting out rooms in your home. How can you house hack while making a profit and still enjoy coming home?
Make It Legal
Make sure it’s legal to rent rooms in your town. Some cities have caps on the number of unrelated people that can live in one home. House hackers must file the rent they receive from tenants as income on their taxes. It would be just like “working under the table” if you didn’t report your rental income.
You also need to make sure that renting out rooms doesn’t violate building or fire codes. If your house has a septic tank, you should never rent to more people than the tank is equipped to handle.
Do Your Homework
The most important consideration is to make sure house hacking will be profitable. Find the average cost of renting a home of your size and divide it by the room(s) you’re offering. If 3 bedroom homes in your city cost $1,500 a month, you should charge $500 for one of your 3 bedrooms.
Since your tenants will live side by side with you, you need to make sure that they are safe and will pay you. It’s worth the money to hire a professional company to take care of doing background and credit checks on all potential tenants.
Be Honest With Yourself
These are serious decisions to make. Will you rent to anyone, or do you have to know the person? Only you know the answer to these questions.