Are you considering renting a room in your home to earn extra income?
Before we started traveling full-time, we owned a house and over the years hosted four different roommates.
We rented an extra bedroom and the finished basement, which provided a reliable way to bring in supplemental income.
Although having roommates isn’t always perfect, the extra money we earned helped me pay down debt and build savings.
I’ve experienced renting a room from both perspectives: I rented a spare room before buying my own home, and later I hosted renters in my house.
While renting a room does require some effort, it can be a relatively passive income source that brings steady cash without a full-time commitment.
Benefits of renting a room in your home can include:
- Extra money to help pay off your mortgage sooner
- A roommate who can watch pets when you travel (some homeowners offer discounts to responsible pet-sitting roommates)
- Relief from living paycheck to paycheck
- Potential to accelerate retirement savings
- Diversification of your income streams
Renting a room is unlikely to make you wealthy overnight, but it can generate meaningful side income. I know people who rented multiple rooms and used that income to fully pay off a mortgage.
According to Zillow, about 30% of U.S. adults live with a roommate or parent, and in some cities—such as New York, Los Angeles, and Miami—the share exceeds 40%. That’s a lot of people sharing housing and splitting costs.
Deciding to rent a room takes thought. Some homeowners thrive with roommates, while others prefer living alone. Renting a room is one of the more substantial and consistent things you can rent to make extra money.
Note: This article covers long-term room rentals. If you’re interested in short-term vacation-style rentals, consider services like Airbnb. For our experience combining Airbnb and real estate, see “How We Reached Financial Independence Using Airbnb & Real Estate.”
Related content about renting a room:
- Debunking 5 Myths About Renting out a Room to a Stranger
- How This 29 Year Old Is Building A Real Estate Empire
- How This 34 Year Old Owns 7 Rental Homes
- Craigslist Scams I Encountered When Looking For A Rental Plus Real Scam Emails
What you need to know about renting a room in your house for extra money
What does renting a room include?
Renting a room can mean different things depending on your property. You might rent out:
- A bedroom within your home
- Your entire finished basement
- Part of a basement
- Mother-in-law or in-law quarters
- A bedroom plus access to living and dining areas
If the space has a separate entrance—such as a basement apartment or an independent in-law suite—the renter will have more privacy and ease of access. However, many rentals don’t have separate entrances, and sharing common areas like the kitchen, living room, and sometimes a bathroom is common.
Consider how you use your home and whether you’re comfortable sharing the kitchen, bathroom, washer and dryer, and dining area. Renting a room can mean lifestyle adjustments, but for many homeowners the financial benefits outweigh the compromises.
Is it legal to rent a room in your house?
Before moving forward, check local laws and regulations. Some municipalities, HOAs, or landlords require permission or have restrictions on subletting or renting parts of a home. If you rent your home, always get your landlord’s approval—your lease may prohibit additional tenants.
Homeowners association rules can also restrict renters or short-term occupants and may impose fines for violations. Additionally, you must comply with federal and state housing laws. The Fair Housing Act forbids discrimination based on race, color, national origin, religion, sex, familial status, or disability—ensure your rental practices align with the law.
How much should you charge for rent?
Setting the right rent takes research. Price too low and you may lose money to wear and tear and higher utility usage; price too high and you may struggle to find a tenant.
To establish a fair rate, compare similar room rentals in your area and consider what extras they include: private entrances, parking, a private bathroom, or access to outdoor space. Decide whether utilities will be included in the rent or split; including utilities can simplify billing but may lead to higher costs if a tenant is wasteful, while splitting utilities encourages more mindful usage.
Room rents vary widely—examples range from around $400 to more than $1,000 per month depending on location and amenities. Even a modest $400 per month adds up to $4,800 per year, which can make a noticeable difference in your finances.
How can I find renters for my spare room?
There are many ways to advertise your rental:
- Tell friends and family
- Post a sign on your lawn
- Share on personal social media
- Place an online ad on classified websites
Online listings are often most effective. Always be honest in your listing: accurately describe the room size, which areas are included, whether there’s a separate entrance, and include photos of the space.
Should I rent to a friend or family member?
All of the people who rented from me were friends or family and were a great fit, but experiences vary. Renting to someone you know can work well if expectations are clear, but it can also strain relationships if the tenant is late on rent, messy, or disregards rules.
Be upfront about rules and expectations, and address issues early. If you’re worried about damaging a personal relationship, it may be best to avoid renting to friends or family.
How can I make sure it’s a good fit?
Screen prospective roommates carefully. Conduct interviews and ask questions about employment stability, recent rental history, why they need a new place, and their typical schedule (for example, if they work nights and you work days). Ask for references and consider a background check if you want extra reassurance—remember, this person will be living in close proximity to you.
Should I set rules with my roommate?
Before move-in, discuss rules and expectations to prevent misunderstandings. Putting terms in writing—like a rental agreement—helps protect both parties. Items to address include:
- Monthly rent amount
- Rent due date and payment method
- Length of the rental period
- Guest, party, and sleepover policies
- Noise levels
- Cleaning responsibilities
- Off-limits areas
- Smoking policy
- Pet rules
- Parking
- How bills and shared supplies (utilities, toilet paper, trash bags) are split
Discuss these terms well in advance so there are no surprises.
Do I have to pay taxes if I rent out a room?
I’m not a tax professional. For guidance on tax implications, consult tax experts or reliable resources that cover rental income reporting, allowable deductions, and how renting part of your primary residence may affect your taxes.
Two resources often referenced for tax guidance are NOLO’s articles on tax issues when renting out a room and TurboTax community discussions. If you need definitive answers for your situation, speak with a qualified tax advisor.
Summary – Should you rent out your extra room?
Renting a room involves preparation and ongoing communication, but it can be a valuable source of extra income. The biggest advantage is the additional money you earn, which can help you save, pay down debt, or stop living paycheck to paycheck.
The main challenge is adapting to sharing your space. While most arrangements work out, occasional problems can arise—late rent, damage, or messy habits—so careful screening and clear rules are important.
Many homeowners successfully find roommates each year and find the experience worthwhile. Whether you choose to rent your extra room depends on your comfort level with sharing your home and your financial goals. Personally, I’m glad we rented rooms over the years and would do it again if needed.
Are you thinking about renting a room in your house to earn extra money? Why or why not?