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In the video, Matthew discusses creating a room rental agreement using legal templates. He recommends accessing the legal templates link provided in the video description. He guides viewers to navigate to "real estate forms," where they can find the room rental agreement under the "tenants" section. After selecting a state, he demonstrates the process of creating the document, starting with identifying the principal tenant and selecting the type of lease agreement—choosing "standard." Viewers are led through providing details such as the tenant's name and monthly rent amount.