Hey there! Today, I want to share an inspiring story from one of our readers, Max, who has managed to collect $80,000 in rental income by renting out his spare rooms. Let’s dive into how he did it.
Max here, a guy from the suburbs of northern California. Growing up with three brothers, our house was always chaotic. My dad worked long hours in sales, and my mom stayed home with us. I struggled in school, nearly getting held back in third grade. My mom always encouraged me to do my best, but it wasn’t until later that I truly understood her advice.
High school was a bit better for me because I joined an occupational program that let me work in the afternoons. My first job was at a pawn shop, where I saw people struggling financially. This experience taught me a lot about money management.
Fast forward a few years, I bought my first house. I was thrilled to finally have my own space. But soon after, I lost my job when my company merged with a competitor. I was left with a mortgage and almost no savings. It was a tough time, but I remembered my mom’s words and decided to do my best.
I spent hours researching side hustles and found an article about renting out spare bedrooms. I thought, “Why not rent out my extra rooms to cover the mortgage?” My mortgage was just under $1,000, so renting two rooms at $500 each seemed like the perfect solution.
Having grown up around rental properties, thanks to my parents, I had some insight into being a landlord. My dad taught me the importance of treating tenants with respect and maintaining the property well.
However, renting out a room in a house you’re living in is different from renting out an entire property. I did a lot of research and learned the hard way that a generic lease agreement wouldn’t cut it. I created my own room rental lease agreement, which you can download from my blog.
Here are the five key steps I followed to find the perfect roommates and ensure everything ran smoothly:
1. **Perfect Roommate Wanted**: I made my ad very specific, listing all the qualities I wanted in a roommate. This approach worked wonders, and I found a great roommate who stayed for over three years.
2. **Which Questions to Ask?**: I crafted specific questions to ask potential roommates, like if they had the first month’s rent and security deposit ready and why they thought they were the right fit for the house. This helped me filter out unsuitable candidates quickly.
3. **The Ever-Important Rental Agreement**: I made sure to have everything in writing, including whether the lease was month-to-month and what would happen if a tenant defaulted on rent. I also required tenants to have renter’s insurance.
4. **More Rules**: I established house rules, like no overnight guests and quiet hours, to keep the peace. The more rules I added, the better the roommates I found.
5. **Be Strict**: I stuck to the agreements and charged late fees when necessary. This ensured my roommates respected the rules.
Following these steps, I’ve collected over $80,000 in rent and saved $100,000. Being a landlord has shown me that a 40-hour workweek isn’t the only way to make money. I’ve created a step-by-step course to help others rent out their spare bedrooms and earn passive income. If you’re interested, you can enroll here.
Now, I can confidently tell my mom that I’m doing my best in all areas of my life, and that makes it all worthwhile.
Happy landlording!
Max
P.S. For a limited time, I’m offering a 25% discount on the course for all Making Sense of Cents readers. Use code MICHELLE at checkout for the discount.