There's a variety of settings as to why you would want to rent your room out for extra cash. These may range from helping with your monthly mortgage payments, to help facilitate your Christmas trip to the village with your family, or to simply meet the costs of home improvements.
The appeal of such a venture may at first sound like a drag. But in fact it’s actually easy to grasp, especially when you’re considering a boost to your income and survival, without ever leaving your home.
In addition, there are certain drawbacks that require in-depth consideration for allowing someone completely new into your home and, of course, your life.
This being said, the article kicks off with pros and cons of renting out your room. And as you read on, the article ends with a guide for those who find the idea worth every kina and toea to put into perspective.
The Pros and Cons of Renting Out Your Room
1. A boost to your income
Making money is by far the main motivator behind this concept, even though the following factors have a strong bearing on your rental income:
Your place of residence: whether it’s somewhere in Port Moresby, Lae or Mount Hagen - the major centers - your rental charge will reflect the popularity of the location, in terms of the local setting, the neighborhood and the attractions. For instance, an area that’s well known among tourists or the working class may summon a higher, competitive rental charge.
Type of room you offer: a match box like room in your home won’t be or shouldn’t be as lucrative as one that symbolizes space, air and convenience.
Type of services: not only is this synonymous with lodgings, inns, motels or hotels. A courtesy offering such as security, laundry for your tenant, escort to and from the tuck food market, or a guide to exploring the neighborhood are worth the consideration, and will make sense for a higher rental.
In the end, how you manage your rental income is entirely up to you. But always make sure that what you earmarked your earnings for must be achieved, such as to help with your mortgage payments, or just to get by everyday with a little comfort.
2. Tax benefits
For starters, a tax benefit can be seen as an all-encompassing term that notes a form of savings for a taxpayer. PNG's tax regulations concerning every stakeholders, business entities, and the ordinary citizens alike, are determined by IRC.
With respect to renting out your room, on the whole, it can qualify as a business. However, your eligibility to claim for these valuable deductions will largely entail your understanding and intentions, and whether or not you've made notifications about your venture to IRC.
In most cases, renting your room out for extra cash in PNG may fall under exempt income as narrated under other incomes of individuals of the Income Tax legislation.
Although it isn't necessarily important in many cases in PNG, it's worth mentioning in comparison to what traditional landlords have to deal with; with renting out your room, you’re spared many legal obligations.
For instance, you don't need to sign a tenancy agreement, although it's a must that you put together in writing both you and your lodger's rights and responsibilities. This may cover rent, length of stay and any services which you may offer over and beyond your room for rent.
With this document, you’re able to review and amend from time to time as your experience progresses in time.
4. Good company
There are occasions where people end up living by themselves, and you may be part of such statistics, too. Nevertheless, this concept offers the benefit of having someone around.
Even if your renter or tenant has a day job or is quite busy most of the time, just the thought of having someone around as a valuable company will give you a peace of mind and sense of security.
Equally effective, if there are tasks or assignments that are beyond your ability, you can always turn to your tenant or renter for help, in which case you can offer to give a discount on the rent in exchange for the assistance.
Not all good things in life are often for free. Most come with a price tag, and renting your room out is one of them. Although it may seem an excellent and easier way of making money upfront, without ever leaving your home, you may be surprised to find that this venture can be costly.
Things like preparing the room to reasonable living standards may entail costs, especially if you have to engage the services of professional tradesmen. Repairs and upgrades to utilities intended for tenant use will factor in, and if you're serious about this journey, you really don't have much choice - it’s a hurdle you must anticipate, regardless.
Unless, there's an agreement between you and your tenant to share the fixed proportion of cooking gas, water and electricity bills, you're bound to meet these expenses yourself.
Even a service as simple as doing your tenant’s laundry has associated costs. Now, they may not appear much at that time, but when they’re brought together as expenses, make sure you have a paracetamol nearby, because you’ll be in for a lot of headache.
2. Mortgage issues
Now, if you're a first-time home buyer, for the bank to know that part of your monthly mortgage repayment will come from renting out your might not be a good idea, in most cases, because it may see this unreliable and won't pass the affordability test with flying colors. But it's still wise to inform the bank of your strategy - the truth matters.
In a similar fashion, if you've already taken out a loan and find yourself in this situation, it's still worth mentioning to your lender. After all, we all would love to have some kind of cushion in our budgets, and whatever that works best to help shouldn’t be overlooked.
3. Personality clashes
This stems from two main sources:
Even though your best friend may take up the tenancy, you will find that living together isn't the same as socializing. An example would be, your friend's short temperament which is quite endearing on a social night out can go horribly wrong for your household.
There's no guarantee that your tenant or renter will live in peace and harmony with you. So it's a good approach to screen every potential tenant before you let them into your house. There's always two sides to a coin, so no never judge a book by its cover. Learn to play well and play safe.
In retrospect, this is an extension of point 3.
No matter what may justify your reason for renting out your room, your safety and security will make the tip of the spear.
Doing a comprehensive background check of all your potential tenants, before they move is probably, thus far, the best thing you can ever do.
The thing is you don't want to be woken up from a beauty sleep with a dawn raid by the police, in search of your tenant because he's a suspected robber, or murderer. Worse still, a group of relatives trying to break down your front door because your tenant borrowed some money off them and hasn't repaid for more than three months' fortnights.
There may be many reasons why you want to rent your room out for extra cash, we get it. The idea is also fast becoming a common place for homeowners looking for creative ways to help reduce their loan fast. But nothing good comes for free these days, and this venture is one of them.
Pros and cons remain an unbreakable bond with every attempt to better your life. So, to make the most of this concept, no matter what your justification for getting on this road may be, it only makes much sense to weigh the pros and cons of renting out your room for extra cash, before you take the first step.
We hope you found this article helpful. Visit us again for Part 2 of this two part guide, and for all the latest news, tips, and updates on Marketmeri.com.
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