Your home is the #1 investment that pays you back. Most of the time, that ROI does not come until you actually sell the property. Every renovation and budget you’ve dedicated to your house can result in getting more money back when it sells compared to the price you paid for it. Another option to speed up those returns is by renovating your home to accept a renter. This is most often done with a walk-out basement so that the tenant can come and go without disrupting your everyday life. This allows them to have a completely separate entrance to their living space.
The major question that arises if you have an empty space that could be used to generate income is “should I?”
Things to Consider Before Renovating For a Rental Room
The first thing you need to square away before considering a next step is the paperwork involved. For example, is renting a room legal in your town or city? Does your homeowners insurance allow it? You also may need an inspection to make sure your house is up to code.
Another issue to explore is if the renovation the space is going to be worth your time. Are there a bevy of (quality) tenants potentially available in your area? Are you going to be okay with someone sharing your home? Are you prepared to deal with collecting overdue rent or evicting a person for nonpayment or not obliging to your rental rules? If you are fine with the components that go along with renting, it can be a great way to make extra money. You’ll also be providing a person with a new living space.
What is Involved With Renovating a Room For Rental?
For your convenience as well as legal and safety reasons, remodeling an area of your house for a rental can be a large project. Here are a few required components of the living space for a renter:
- Working plumbing and electrical
- Smoke alarms
- A separate exit
- More than one window
- Egress windows for fire escape
- Parking / storage
One of the most important thing about the renovation project is finding the right tenant after the work is complete. Take time to fully understand the process of renting, security deposits, lease term lengths, and more. A con of renting a space in your house can be any damage if there are disrespectful tenants. Noise is also something to consider when thinking about having a tenant living in your home. You can check for references and past rental history when you meet with prospective tenants. If you get the right renter however, leasing out a space in your house creates a very significant income and can help you pay off your mortgage faster or provide extra cash in your pocket.
Considering only rental for a few years? That’s fine, too! Renting out a space in your home will provide additional income during that time. After you no longer are interested in renting, you’ll have a great, comfortable space for family or friends to stay when they visit.
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