Ready to run background checks the modern way?
Thinking about renting out that extra room in your house? It's a smart way to turn unused space into steady income. The process looks a lot like renting out a full property: you'll set a price, screen applicants, sign a lease, and follow local laws. But there's one big difference: you'll be sharing your home with your tenant.
Key takeaways
- When you rent out a room, you're creating a landlord-tenant relationship with legal obligations that vary by state and city
- Setting clear criteria before you list a room helps you attract applicants who'll be a good fit for your home
- Running a background check helps you check a tenant's identity, rental history, and financial habits before you sign a lease
- Rental income is generally taxable, though some related expenses may be deductible
12 tips for renting out an extra room in your house
These tips walk you through the practical and legal steps that are generally applicable when renting out a room, from preparing the space to screening tenants and managing the arrangement once someone moves in.
1. Get the room renter-ready
A renter-ready room is clean, safe, and functional, with working locks, adequate lighting, and access to shared spaces like the kitchen and bathroom. Before you list the room, walk through it and make note of anything that needs attention.
Common tasks to complete before showing the room include:
- Repairs: Fix broken locks, patch holes in walls, and test smoke and carbon monoxide detectors.
- Cleanliness: Deep clean the room, closets, and any shared spaces like bathrooms or the kitchen.
- Furnishings: Decide whether to rent the room furnished or unfurnished. Furnished rooms often attract tenants faster, depending on their situation and the length of time they plan to stay.
- Storage: Make sure your tenant will have adequate closet or storage space.
In most states, you're legally required to provide a habitable living space. Habitability standards vary by jurisdiction but generally include working heat, plumbing, and structural safety.
2. Review landlord-tenant laws in your state
Renting out a room, even in your own home, creates a landlord-tenant relationship. That means local and state laws apply to how you collect rent, handle deposits, and resolve disputes.
There are a few key areas to research before listing:
- Security deposits: Most states cap the amount you can charge and set rules for how deposits are held and returned.
- Required disclosures: Some states require you to disclose known issues like lead paint or mold.
- Eviction procedures: If a tenant stops paying rent or violates the lease, evicting them requires you to follow a multi-step legal process with appropriate notice.
- Fair housing laws: Federal law prohibits discrimination based on race, color, religion, sex, national origin, disability, or familial status. State and local laws may add additional protected categories.
3. Talk to your insurance provider
Your standard homeowners insurance policy may not cover incidents that involve a paying tenant. Before a tenant moves in, contact your insurance provider to review your current coverage:
- Homeowners policy gaps: Many standard policies exclude liability or property damage related to rental activity.
- Landlord insurance: A landlord or dwelling fire policy can cover property damage, liability claims, and loss of rental income.
- Renters insurance: Some landlords require tenants to carry their own renters insurance policy to cover personal belongings and liability.
4. Set a competitive rent price
Two common approaches to setting rent prices include:
- Comps-based pricing: Find similar room listings nearby and adjust your price based on differences in size, amenities, and location.
- Cost-based pricing: Add up your monthly housing costs (mortgage, utilities, insurance, taxes) and calculate what percentage of that the renter's space represents.
Room rental prices vary based on location, room size, included amenities, and local market conditions. Researching comparable listings in your area gives you a realistic starting point.
For the comps-based approach, consider the following factors and how they influence the amount of rent you might want to charge:
Factors to consider | Impact on rent price |
Location and neighborhood | Higher-demand areas typically justify higher rent |
Room size and features | Larger rooms with closets or private baths rent for more |
Furnished vs. unfurnished | Furnished rooms often command a higher price |
Utilities included | Including utilities justifies a higher monthly rate |
Shared vs. private bathroom | Private bathrooms increase the value of the living space |
Parking availability | Dedicated parking adds value, especially in urban areas |
To find comparable prices, search room listings on Craigslist, Zillow, Facebook Marketplace, or Roommates.com in your area. Adjust your price based on what your room offers relative to similar listings.
The length of the lease also affects pricing. Month-to-month arrangements often carry a small premium over fixed-term leases because they offer more flexibility. Seasonality, proximity to public transit or universities, and local rental demand can also influence how much rent you’ll charge.
5. Define your ideal tenant criteria
Establishing screening criteria before you list helps you evaluate applicants consistently and fairly. Document your criteria in writing before you begin accepting applications.
Here are a few common criteria for landlords to consider:
- Income: Many landlords look for monthly income of at least two to three times the monthly rent or a similar metric, like overall employment status, so the prospective tenant can demonstrate their ability to pay.
- Rental history: Prior evictions or disputes with landlords may be relevant to your decision.
- Lifestyle preferences: Policies on pets, smoking, overnight guests, and quiet hours are worth defining upfront.
All criteria you set must comply with federal and local fair housing laws. Criteria based on protected characteristics, such as race, religion, or national origin, are not allowed.
6. Establish house rules for shared spaces
House rules set expectations for daily living and help reduce the likelihood of conflict. Put them in writing and attach them to the lease so you both have a clear reference.
Here are a few common house rules to consider:
- Quiet hours: Define times when noise should be kept to a minimum.
- Guests: Set limits on overnight guests or the frequency of visitors.
- Cleaning: Assign responsibilities for shared areas like the kitchen, bathroom, and living room.
- Parking: Clarify whether the tenant has access to a parking space.
- Smoking and pets: State your policies clearly, including any fees or restrictions.
7. Write a clear and honest rental listing
A well-written listing sets accurate expectations and reduces back-and-forth with prospective tenants. Be specific about what's included with your room and what's not.
Include the following in your listing:
- Room details: Mention size, furnishings, closet space, and any unique features.
- Photos: Provide clear images of the room, bathroom, kitchen, and shared living areas.
- Utilities and amenities: Specify what's included in the rent, such as Wi-Fi, laundry, or parking.
- House rules: Mention key expectations upfront, such as no smoking, no pets, or the hours guests can visit.
- Rent and deposit: State the monthly rent and security deposit amount clearly.
- Screening requirements: Let applicants know that a background check and rental application are part of the process.
8. Pre-screen interested renters
Pre-screening is a brief conversation, by phone, text, or message, that helps you determine whether a potential tenant could be a fit before you schedule a showing with them. This saves time for both you and the applicant.
Questions to ask during pre-screening:
- When are you looking to move in?
- How long are you planning to stay?
- What is your monthly income?
- Do you have pets or plan to get any?
- Are you comfortable with a credit and background check?
If an applicant's answers conflict with your criteria, you can politely decline before investing time in a showing or formal application.
9. Host in-person showings and interviews
An in-person showing lets both of you assess whether the living arrangement is a good fit. Show the full space, not just the available room, so the applicant has a realistic picture of what daily life will look like in the home.
During the showing:
- Walk through the room, bathroom, kitchen, and shared living areas.
- Explain house rules and daily routines, like work schedules, cleaning expectations, and guest policies.
- Ask about the applicant's schedule, lifestyle, and reason for moving.
- Take notes as needed so you can compare applicants later. Often, it’s best to take notes directly after the showing, when it’s still fresh in your mind.
10. Run a tenant background check
A tenant background check helps you verify key details about an applicant before signing a lease. Background checks are governed by the Fair Credit Reporting Act (FCRA), the federal law that sets rules for how consumer reports are used in decisions about housing, credit, and employment.
Under the FCRA, if you use a consumer report—a background check prepared by a consumer reporting agency—to make a rental decision, you must:
- Notify the applicant in writing that a background check will be conducted
- Get the applicant’s written consent before running the check
- Follow the adverse action process if the report leads to a denial
Common components of a tenant background check include:
- Criminal history search: Reviews county, state, and national criminal records for relevant offenses
- Eviction history: Identifies prior evictions or landlord-tenant court filings
- Credit check: Reflects payment history, outstanding debt, and financial habits
- Identity verification: Checks whether the applicant is who they say they are
It’s also important to check if your rental is in a location where state or local tenant screening requirements may apply. The FCRA applies to rentals nationwide, but you may also need to follow additional state and local requirements for tenant background checks based on your location.
Checkr Tenant supports FCRA-compliant screening for your potential tenants, with fast, accurate reports. You can get started with Checkr to run criminal background checks, identity verification, and more in one streamlined workflow.
Run background checks on tenants
Are you a current tenant or applicant? Run self background checks here>
11. Draft a room rental lease agreement
A written lease documents the agreed-upon terms and gives both of you a reference point if questions arise. A room rental lease is similar to a standard lease but may include additional provisions for shared spaces.
Include the following elements in the lease:
- Parties and property: Full names of all occupants and the property address
- Rent terms: Monthly amount, due date, accepted payment methods, and a late fee policy
- Security deposit: Amount, conditions for deductions, and refund timeline
- Lease term: Whether the agreement is month-to-month or a fixed-term lease
- Shared space rules: Kitchen, bathroom, laundry, and common area expectations
- Termination: Required notice period for either party to end the agreement
State-specific lease templates are available through many legal resource sites. An attorney familiar with local landlord-tenant law can review the agreement before you sign.
12. Track rental income and expenses for taxes
Rental income from a room in your home is generally taxable and reported on your federal income tax return. The IRS defines rental income as any payment you receive for the use or occupation of property, including monthly rent, advance rent, and fees paid by the tenant on your behalf.
Some expenses related to the rental may be deductible:
- Proportional mortgage interest and property taxes: Calculated based on the percentage of your home that’s used for rental purposes
- Repairs and maintenance: Costs directly tied to the rented room or a proportional share of shared-area repairs
- Utilities: If utilities are included in rent, a portion may be deductible
- Depreciation: A proportional share of your home's value may be deductible over time
Security deposits are not taxable when they may be refunded. If you keep a deposit for unpaid rent or damages, it becomes taxable income in the year you retain it. The IRS Publication 527 covers residential rental property tax rules in detail. A tax professional can help you apply these rules to your specific situation.
How rental income from renting out a room is taxed
Payments you receive for a room rental are taxable rental income and are typically reported on Schedule E (Supplemental Income and Loss) of Form 1040. This is separate from your wages or self-employment income.
Rental income includes more than just monthly rent payments. Examples include:
- Advance rent paid before the lease period begins
- Pet fees, parking fees, or other monthly charges
- Payments a tenant makes on your behalf (such as a utility bill)
- Security deposits kept for unpaid rent or damages
Expenses that may be deductible are calculated based on the portion of your home that’s used for rental purposes. For example, if the rented room represents 15% of your home's total square footage, 15% of shared expenses like mortgage interest or utilities may be deductible.
The IRS provides guidance on rental income and expenses that covers common scenarios for homeowners renting out part of their property. A tax professional can help you apply these rules accurately based on your records and location.
Recruitment messaging, evaluation criteria, and policies reflect an organization’s values in observable ways—through the language in job postings, the structure of interviews, and the fairness of screening decisions. Candidates evaluate these signals during the hiring process just as employers evaluate candidates during interviews.
A recruitment strategy is not static. Regular review, such as monthly for operational metrics and quarterly for strategic alignment, helps your team identify what’s working, run experiments, and update your approach as hiring volumes, skills demand, and market conditions change.
Rent out your extra room with confidence using Checkr
Renting out a room involves more moving parts than you might expect at first. Pricing, listing, screening, leasing, and ongoing tax tracking all play a role. One of the most important steps is verifying who you're renting to before signing the lease.
Checkr's background check platform makes it straightforward to run FCRA-compliant tenant screening, including criminal history searches, identity verification, and eviction history. Reports are fast, easy to read, and designed to support informed decisions, not replace them. Get started with Checkr to screen potential tenants with confidence.
Run background checks on tenants
Are you a current tenant or applicant? Run self background checks here>
Frequently asked questions about renting out a room in your house
Is it legal to rent out a room in your own house?
In most areas, it's legal to rent out a room in your own home as long as local zoning laws, landlord-tenant regulations, and any applicable HOA rules allow it. Your local housing authority or a real estate attorney can help you understand what applies to your specific address.
Can a landlord deny a rental applicant based on background check results?
Yes, you can deny an applicant based on relevant findings in a background check, such as a prior eviction or significant criminal history. However, the denial process must comply with FCRA requirements, including providing a pre-adverse action notice, and cannot be based on protected characteristics under fair housing laws.
What steps can a landlord take if a tenant stops paying rent?
If your tenant stops paying rent, the next step is typically to issue a written notice to pay or vacate, as required by state law, before beginning a formal eviction process. Self-help eviction tactics, such as changing locks or removing a tenant's belongings, are unlawful in most jurisdictions.
Do homeowners need a business license to rent out a room?
Business license requirements vary by city and state. Some jurisdictions require a rental license, permit, or registration before you can legally rent out a room. Your local government or housing authority website is the best place to confirm what applies to your address.
Disclaimer
The resources and information provided here are for educational and informational purposes only and do not constitute legal or tax advice. Always consult your own counsel or a qualified tax professional for guidance related to your specific situation.
About the author
Checkr is the data platform that powers safe and fair decisions. We’re a technology company that helps our customers assess risk, modernize hiring, and cultivate trusted relationships in their workplaces and communities.
