Hoping To Rent Out Your Room To Earn Extra Income? A Quick Guide For First Timers

Most of us always wanted to have some ‘passive income’.

It never hurts to get extra cash, and what better way than to rent out that room which you hardly use to someone in need of a place to stay?

Although that sounds like a win-win situation, there are actually quite a number of pitfalls to look out for.

The devil’s in the details, and I’m sure you have heard of many horror stories of landlords getting into heated disputes with their tenants. Well, most of it is avoidable provided one prepares well in advance.

The good news is, we compiled a simple quick guide for first timers. In this particular scenario, we presume that you have found your candidate(s), and are mulling over the tenancy details.


This is first and foremost in the checklist. Many of us would have heard of this before. Especially if you are renting out to foreigners. Make sure their legal documents like work permits are valid.

Make a copy for your record. You don’t want to get into trouble with the law for renting to illegal immigrants or overstayers. No point pleading or feigning ignorance with the law as the courts and HDB won’t buy it.

For such violations, HDB has the right to confiscate the flat from you, the lease-holder. Ouch!

[Image credits: academyofmine.com]

[Image credits: academyofmine.com]

Drawing The Line On Utilities

Apart from agreeing on the rental and the deposit to be collected, do give some thought on how utilities are to be paid.

Previously, it was common practice for landlords to present it as a package by factoring in the estimated utilities cost into the rent. However, utilities in Singapore nowadays cost a bomb.

It always goes up. It hardly ever goes down even if the price of oil has declined.

In the event that you decided to split the utility bills, you need to be clear on exactly how much each party should pay. Do you just collect a lump sum each month, or do you split the cost equally?

Do bear in mind that there is a possibility the tenant may exploit the situation and use the aircon or other energy-guzzling devices all-day long, and that will saddle you with hefty utility bills.

Should you happen to be one who hardly stays at home, that will be disadvantageous to you.

One possible solution is to impose a financial penalty should the tenant use beyond an agreed threshold. But the tenant could always deny. A more plausible solution involves paying for how much you use.

For instance, you could arrange with the electricity provider such as Singapore Power to install a utility meter in the unit you are renting out and charge the utility payment accordingly.

[Image credits: billsdepot.com]

[Image credits: billsdepot.com]

Bringing Guests Over

Some tenant may like to bring their friends or relatives over. Now this is really a delicate balancing act. Impose too many restrictions and probably no tenant will want to take up your offer (unless he is a hermit).

And do not leave it to chance and play by ear, because by the time the tenant brings his guests over, you will already be caught in the situation.

Do set some ground rules so that things do not go out of hand.

For instance, you might allow them to have people over only up to a certain time in the day. Remember about credentials, and you should also ban guests from staying overnight.

You never know the guest’s background and the risks are entirely yours to bear. Also, do think of possible scenarios like the tenant’s family or friends dropping by from overseas.

Noise & Air Threshold

You should set some ground rules in advance, such as banning loud music (that will wake up the neighbourhood too!) or use of the TV and other devices after midnight.

With regards to air threshold, it’s also good to set some ground rules for that too.

You can consider only allowing smoking at a designated space like the balcony or outside the walkway.

[Image credits: haikudeck.com]

[Image credits: haikudeck.com]

Tenant’s Lifestyle

Do check up the tenant’s lifestyle and his schedule.  This is to prevent you from inadvertently renting to someone whose lifestyle could be disruptive towards yours.

For instance, if you are an office worker who is out from 8am to 8pm every work day, you might want to avoid renting to a student who’s up and about till the wee hours of the morning.

That could really disrupt your lifestyle and deprive you of much-needed rest after a long work day. A better fit would be to find someone who is roughly working the same hours as yourself, and that would probably be a more mature tenant.

An added benefit is that you might have more in common and can interact better.

[Image credits: thestar.com]

[Image credits: thestar.com]

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