Extra rooms are an untapped real estate opportunity.
It’s not unusual to have an extra bedroom in your house. Indeed, a finder.com analysis of United States Census data suggests that there are 33.6 million of them across the nation. If you assume that each of these rooms could be rented out for $100 a week (which would be cheap in many areas of the US), that adds up to a whopping $174 billion in missed opportunities for extra cash each year.
According to the Census, there are 357,032,421 bedrooms in America, and 323,391,100 people, leaving a surplus of 33,641,321 rooms. The total number of spare rooms is likely to be even higher since many couples share a bedroom. Overall, there are 9.42% more bedrooms than people.
The simple reality is that if you’re not using a spare room, you can easily score $5,000 a year in extra rental income. An extra $400 a month could help you pay off your mortgage faster.
Renting became increasingly common across the US, after the wave of foreclosures that followed the global financial crisis. Currently 35.6% of properties are rented, up from 33.8% in 2000. That in turn means rental prices are rising, creating a potential opportunity to rent rooms to people who can’t afford to rent an entire property themselves.
Before you take that step, though, consider these issues:
- Check with your accountant for the tax implications of the extra income and how to handle relevant tax payments.
- If you’re a homeowner, check on relevant county or state laws surrounding letting spare rooms.
- If you’re renting, check if the terms of your lease allow subleasing of rooms, and if there are only relevant local regulations.
- Make sure that your home insurance policy covers tenants as well.
- Do careful background investigation of potential tenants. Interview them in person and ask for financial records that demonstrate their income.
- Request a rental bond and two weeks’ rent in advance — this will offer you some security if your tenant proves unreliable.