When times are tough, we may have to think of ways to make more money. A second job is one idea, but that’s not always feasible. We can sell some of our stuff, but that’s only a temporary fix.
Many homeowners today have at least considered renting out their basements. On the surface, it makes good economic sense. But there are some things to consider before going through with it.
Pros
Renting out your basement can help you pay your mortgage. In some cases, you may even be able to cover your entire monthly payment with rental income.
It’s an inexpensive way to become a landlord. Instead of buying a rental property, you simply rent out space in property you already own. If you want to become a full-time landlord, this could be a great way to get started.
It is easy to keep an eye on your rental property when it’s part of your own home. You won’t have to travel to do inspections or make repairs, and there will be fewer worries about tenants doing damage without your knowledge.
Cons
Local laws or homeowners’ association regulations may not allow for the rental of basement apartments in your neighborhood. Be sure to check with all applicable authorities before putting your basement up for rent.
Getting your rental up to code can be expensive. In most areas, a rental unit must have a kitchen or kitchenette and a bathroom. Other requirements may include an outside entrance, windows and certain electrical components. If your basement doesn’t already have these things, installing them could cost a lot of money.
Your homeowners’ insurance probably doesn’t cover a rental unit. That means that you’ll have to purchase additional insurance. If you don’t do so and the insurance company finds out about it, they could cancel your policy.
You’ll have less peace, quiet and privacy. Most basements leak some sound, so you’ll have to learn to live with hearing your tenants and having them hear you. For some this isn’t a big deal, but for others it can make life miserable.
Renting out a portion of your home subjects you to a great deal of responsibility. You’ll have to stay on top of maintenance and repairs. Things that could wait if you were using the space for yourself will have to be taken care of right away if you’re renting it out.
Renting out your basement is a good way to make some fairly passive income. But it’s not something you can just jump into. You’ll have to make sure it’s in good repair and that you comply with local laws first. Renting out part of one’s home isn’t for everybody, but it works out nicely for some.
