Pricing a Room to Rent From Your House | Zillow Pro blog

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Landlords renting out their rental property have strategies and tactics to price their dwelling whether it?s looking at comparable units or following seasonal demand. Although there are similarities, ?live-in landlords? renting out the individual rooms in their house have a slightly different approach for setting their rent price. For myself, as ?live-in landlord,? I still do look at comparable prices of rooms in my market because I don?t want to price myself out of it, but there?s other commanding attributes that drive the rent price when you?re renting out a room.

Attributes That Matter

Rental Term ? Requiring a yearly lease deters roommates because it locks them in. Offering a month-to-month agreement or even a quarterly lease is more attractive. Roommates, especially the folks fresh out of college, like the flexibility to move on a whim for job prospects. Traditional landlords don?t like having turnover because the time between tenants could lead to a vacant property, thus losing out on rental income, whereas in the case of? ?live-in landlords,? the rental income from a spare room is extra income to subsidize mortgage payments.

Location ? Like with a traditional landlord, location will probably be the largest factor when it comes to determining rent price. There?s no question that living in a more desirable neighborhood commands a higher rent price.

Cleanliness ? We all like clean places. Think about it, have you ever wanted to check-in to a hotel that received reviews of being dirty? I didn?t think so. A clean and well-kept house is more attractive to roommates than a defunct and dirty house.

Number of other people living in the residence ? Unless you like the frat house atmosphere, most roommate don?t like living with too many people under the same roof. It creates trust issues and quickly dishevels the house.

Amenities ? There?s two types of amenities: Convenience amenities and luxury amenities.

• Convenience amenities definitely add value to the rent price. An in-house washer and dryer provide the comfort of doing laundry virtually any time rather than being confined to the hours of a coin operated Laundromat.

• Luxury amenities are nice to have, but not necessary. These amenities could include a swimming pool and garage space.? In some cases, depending on the individual, it may command a few extra bucks in the rental price. I?ve never had a roommate turn away from my place because it lacked a swimming pool or other nice-to-have features.

Attributes That Don?t Matter

Size of the house ? Though it might be nice to live in a spacious house with several bedrooms and bathrooms, most renters looking to rent a room are comparing the price of one room to another in a given neighborhood rather than a higher-priced room in larger house to a lesser-priced room in a smaller house. Roommates are indifferent to the overall size of the house. In the end, I feel most of them just want an affordable and clean place to rest their head at the end of the day.

Size of the yard ? Roommates are indifferent to the property size of the house from which they?re renting a room. Some renters may have a preference to rent a room from a house with a spacious yard because they have a dog. I don?t allow pets and thus it?s a moot point when it comes to prospective roommates.

Type of heat ? For a tenant renting an entire property, the type of heating used will be an important issue since it?s the renter?s responsibility to pay the utility bill. In the case of renting out a room, roommates are indifferent when it comes to what the source of their heat is. I charge a fixed monthly rent that includes utility and heat. Even if I separated the utilities from the rent price, I highly doubt that my roommates would be deterred by the type of heating my dwelling has.

Recap

Pushing the attributes that matter may be a successful way for ?live-in landlords? to rent out their spare room. I?ve successfully competed with other ?live-in landlords? by renting out spare rooms in my smaller town house for the same rent price or higher as other ?live-in landlords? renting out a room in their house. Additionally, I?ve found that roommates are usually younger people looking for a clean, affordable place and usually not sensitive to the size of the house. With that said, it helps to know your market demographic and cater your spare room to their needs.

Source: http://www.zillow.com/blog/pro/2012-11-15/pricing-a-room-to-rent-from-your-house/

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