Renting out your house in Texas by the room may seem like a financially appealing option, but it’s almost never a good idea. There are numerous complexities and liabilities that come with this approach, which often outweigh the potential benefits. Here’s why you should think twice before renting out individual rooms in your house:
Liability Concerns in Common Areas
When you rent out rooms individually, you subject tenants to shared common areas. This raises significant liability issues. For instance, if a tenant is subjected to a criminal act by another tenant, they may bring a lawsuit against the landlord for negligence. Allegations could surround a failure to conduct a thorough criminal background check or not providing a safe living environment.
Inadequate Standard Lease Contracts
In Texas, standard lease contracts, like the TAR residential lease, are not designed for room rentals. A custom lease contract, drafted by an attorney, would be necessary to minimize your liability as a landlord and accommodate a room rental situation. Custom leases not only add an extra expense but also require continual legal updates.
Utility Bill Complications
Dividing utility bills among tenants renting individual rooms is another headache. It adds an extra layer of complexity in managing your property and can lead to disputes among tenants.
Security Deposit Issues
Assessing damages to common areas and allocating them to specific tenants for security deposit accounting and refund purposes is nearly impossible. Since all tenants have access to common areas, pinpointing responsibility for damages is challenging.
Evicting a tenant from a specific room presents its own set of complexities. Standard eviction forms in Texas don’t cover room-specific evictions, and Justice Courts are not accustomed to processing room rental evictions. Navigating this novel process would likely require the expertise of an attorney.
Municipal and HOA Restrictions
Local municipalities and HOA documents often have restrictive rules about the number of unrelated persons that can occupy a house. These restrictions are often more burdensome than state and federal level restrictions. Understanding and adhering to these rules can be complex and may require legal advice.
Given these factors, our property management company does not manage properties rented by the room, and we advise property owners against it. The risks and complexities involved often make this rental strategy more trouble than it’s worth.
Before deciding on such a rental strategy, consider the potential legal implications, added expenses, and management headaches. It’s usually better to rent out your property as a whole rather than dealing with the numerous challenges of renting it by the room.