Renting out a room might seem straightforward, but there are several steps you can follow to help make the process a smooth and mutually beneficial arrangement for both you and your tenant.
Prepare your home
Before listing a room, it's ideal to ensure your entire home is in a welcoming and habitable condition. Think about what you’d expect if you were the one moving in. Clean thoroughly, address any safety concerns, and make necessary repairs or improvements. Oftentimes you're not just renting a room, you're including the use of communal spaces, like the kitchen and living room.
Determine a competitive rent
Setting the right rent is a balancing act. Consider the current market rates in your area, the amenities you offer, and the overall condition of the room. You want to be competitive but also reasonable. If the amount you’re going to be bringing in, after tax, isn’t going to make a significant dent on your mortgage repayments, you may want to reconsider your decision.
Flatmates.com.au has a “value my room” tool, which shows the current average weekly room rent by suburb or postcode and what the equivalent annual income might be. Be aware that these figures are before tax and don't include additional upfront and ongoing expenses.
Draft a detailed rental agreement
This step is crucial for both parties. A comprehensive rental agreement should cover rent details, house rules, responsibilities, and the terms of the tenancy. Be as detailed and clear as possible to avoid misunderstandings later on. Consult with a professional if you have any doubts.
Advertise and interview
Once the room is ready and the terms are set, it’s time to advertise. You can use various platforms such as online rental websites, social media, or community boards. When potential tenants show interest, conduct interviews to gauge compatibility and reliability. Don't be afraid to ask questions. It can save time and hassle down the track. For example, you may have an inclination not to allow pets, or it may be a rule stipulated by your strata corporation. Transparency between homeowners and prospective tenants is key.
Perform background checks
Don’t underestimate the importance of a background check. This can include verifying employment, checking references, and running a credit check if necessary. It ensures that the potential tenant is reliable and trustworthy.
Finalise the agreement
After finding a suitable tenant, it’s time to finalise the agreement. Go through the terms together, address any remaining questions or concerns, and make sure both parties are clear and comfortable with the arrangement.