The Amateur Financier

(Another Thursday, another Guest Post.  This one covers an option that might just work for you, if you have a spare room in your home and have need of extra money in your life.  It could be tricky (what method of making more money isn’t, though?), but if it works, it can be a good way to increase your alternative sources of income without having to put much more time into it.)

Since the global economic recession first hit back in 2007, the real estate market has experienced tumultuous times. Some individuals cannot get access to mortgages to buy and are even being priced out of the rental market.

On the other side, everyday home owning Americans are experiencing difficulties paying their mortgages. The rising cost of living set against redundancy, unemployment and wage freezes means people are trying to make less money go even further.

However, there is a solution here that can help both sides of the equation. Homeowners with a spare room can rent this out to individuals who cannot afford rental on a whole property.

It sounds like a win-win situation and for many people, entering this type of agreement has been hugely beneficial. The most obvious one is that struggling homeowners can pay their mortgages with this extra income.

Renting out a room can make the difference between surviving and foreclosing and of course, it doesn’t have to be forever. Eventually, economic recovery will happen but in the meantime, this may be a great solution.

There are some issues when renting out a room that should be considered. Firstly, you will need a legal contract that is fair to both sides of the deal.

In some states, a homeowner may not enter the tenant’s room without permission, unless it specifies this in the agreement. There are various rules for dealing with defaulting renters of which you need to be aware.

Employ a professional and qualified lawyer who can create a binding rental agreement that is clear and fair to both you and your prospective tenant.

Also, employ a good accountant who can help you declare the extra income in the most advantageous way. There are all sorts of legal options available that will help you make the most money from this venture.

Do not be worried about spending the money on a lawyer and accountant. Although hiring professionals will cost initially, you will easily recoup this money through tax deductions and other benefits as a result of renting your room.

MSN Money suggest some of the advantages for homeowners of renting a room to pay their mortgages actually go beyond the monetary too, including the possibility that the renter is a reliable house and pet-sitter.

The number of home invasions has risen recently and to leave a house unoccupied can mean others invite themselves in! Unfortunately, most towns have problems with burglary when the economy is under strain.

The presence of a renter, should the homeowner be away from the property on vacation or for business purposes, can be a highly effective deterrent and provide the homeowner with peace of mind.

For busy homeowners, or those of a more mature vintage, there may be other benefits if the tenant has good DIY skills, gardening knowledge or is happy to do the grocery run.

A rent reduction could be agreed for some hours working on the house or in the garden. This could cut down the homeowner’s costs of having to employ a garden maintenance firm or cleaning company.

It is clear that for many householders, renting out a room can be an effective way of paying their mortgages. Do your research and maybe you will find this is a great solution for you too.