I have been a boarder and had boarders, so I have a little experience. It can work out great for all involved provided you do a few things.
1.) Before doing anything find out things like tax implications, will it put you in a different tax bracket, will you lose benefits, etc… In other words, is it really worthwhile?
2.) Check your rights and responsibilities. Most boarders are pretty good, but you need to make sure you know your rights and responsibilities in case things go bad. You local fair trading office or council should be able to give you the info you need.
3.) Check with your insurance company if you need extra insurance with someone else living there or if your current policy is ok.
4.) Will the you furnish the room? If you do you can charge more. In my experience furniture or not makes no real difference to being able to rent the room out.
5.) Will board include any meals? Or would you prefer they do their own? If they do their own, you will need to work out times you can each use the kitchen.
6.) Where will they park their car? Do you have spare off street parking, or can they park on your lawn or is there only 1 spot and they have to park on the street?
7.) How much will you charge? Will that include electricity/gas/water/internet/phone? If you choose to include those things, charge accordingly. Just because you are frugal with electricity or are environmentally conscious, doesn’t mean they are. You can usually get a bar on the phone so only local calls can be made or you can get pin codes for each house member.
8.) Work out your ad. Include everything, like if you have pets or kids, how many people live in the house, are you looking for males or females? Can shift workers apply? Write what the rooms features are e.g. large, built in cupboards, ensuite, cooking facilities in the room, close to amenities etc… Are smokers welcome?
9.) Advertise the room. You can put a flyer on uni/community noticeboards, in the newspaper, tell friends and family in case they know of everyone, advertise online at places like Gumtree.
10.) Hold phone interviews to create a short list of prospects. Basically when someone calls (or emails) about the room, ask a few questions like if they smoke, what work they do etc… to narrow your list.
11.) Have a proper interview where you discuss ground rules, work schedules (e.g. if you have kids someone who does nightshift is obviously not a good idea), having guest stay over, interests/hobbies etc… As well as costs and what is involved.
12.) Trust your instinct. If everything seems perfect about them but your feelings are saying no, don’t accept them. Most of the time our gut feelings are right.
13.) Write up a contract. Include everything in it.
• Bond and deposit paid (e.g. 2 weeks rent)
• Date it was paid and term of contract (e.g. 3months to see if you get on, with the option to continue if both parties agree)
• When rent is due – weekly/fortnightly and what day and will it be paid in cash, into your account or will you use a property management software?
• Which areas of the house are they allowed to use/renting.
• Services you provide. Do you provide any meals/cleaning/lifts?
• Share of house hold bills. Will it just be half each?
• Share of household chores. Alternate cleaning or only clean up after yourselves or pay for a cleaner to come in and do communal areas.
• Room inspections
• Notice period. How much notice they must give you/you them if either one decides to terminate the contract.
• Specific house rules – noise control, house duties, overnight guests, if they can store things such as extra furniture at your house or not. Include everything. If it is in writing and signed by both parties, it cancels out a lot of disputes.
14.) Before they move everything in, take pictures and note everything already wrong with the room. Better yet, go through it with a video camera and the boarder present and create a copy of it for each of you. This will help settle disputes if any arise when they leave (or they cause any damage.)
15.) Remember the room is theirs. It’s their choice if they keep it messy or not. Also remember not everyone gets along and you may find this boarder and you are not compatible. Don’t let that stop you from trying again.
Good luck with it. I know this list might seem over the top, but it’s better to be safe ie prepared than sorry.