From empty nesters with a spare bedroom to first-time homeowners looking to ease the costs associated with a new mortgage, many people are looking to rent out parts of their home. If you’re considering making extra cash from your extra space, here are some do’s and don’ts to keep in mind when turning your home into a side hustle.
Do: Consider What You Have
What do you have to offer? Be realistic about the space you want to rent out, including its limitations. You may have a spare room that you could furnish and offer to travel nurses or students for medium-term rentals, or perhaps your space is set up for a private studio with a kitchenette. Or, perhaps you have a great commercial kitchen that can be used seasonally.
Don’t: Overlook the Outdoor Space
Have a huge, private yard and no pets, or a small outbuilding? Both of these are often-overlooked rental possibilities. Rent your yard out for events, or consider opening it to dogs looking for a romp. A small outbuilding can easily be converted into an artist’s studio or a storage space.
Keep in mind that some tenants may cause more damage than others. If you plan to sell your house and want your beautiful lawn to be part of the draw, inviting dogs to play may not be the best idea.
Do: Comply With Local Laws and Regulations
Many first-time landlords or home business owners are shocked to find out that their rental unit is illegal or that they need to pay fees or special assessments. Before you even consider listing a space for rent, check on zoning restrictions, HOA rules, and city ordinances to see what is allowed. You may need to apply for a business license or a permit before renting any part of your property.
Don’t: Ignore This Step
Just because everyone on the block is doing it doesn’t mean you are immune to the consequences of illegally renting out space in your home. Yes, some jurisdictions allow for a landlord-occupied space to be rented without registration, but not all of them.
Do: Start Small
If you’re unsure about the impact a potential renter or business will have on your life, consider starting small by renting your space for a week or two at a time. You may find that having a break between renters is crucial for your peace of mind. And if it does not work out, you can reassess.
Don’t: Rent Out More Than You Can Handle
Before listing your space for rent, consider how your family actually uses your home. Don’t include space that you regularly need for your daily life. Extra income is always nice, but peace in your home is most important.
Do: Make Your Space Comfortable
It is essential to make your rental space comfortable and inviting, especially if you are planning on renting it furnished. Add fresh paint and simple, sturdy furniture. Remove any personal items.
Don’t: Spend Thousands on the Space
Remember that the goal of renting out space in your home is to create income. Don’t spend money you have not yet made. Keep improvements and furnishings to a minimum until you’ve proven there is a demand and that renting out a portion of your home is something you can live with.
Do: Stay Safe and Private
If you will be inviting people into your home, prioritize safety and privacy. Keep valuables locked up, add cameras, and make sure tenants know which areas of the house are off-limits. There are plenty of affordable screening tools that you can use to initiate background checks on potential tenants.
Don’t: Invade Your Tenant’s Privacy
When installing cameras, they should be restricted to only public areas of the home. Do not make the mistake of placing a camera so that there is a view to any private part of a tenant’s space, including bathrooms and bedrooms.
Do: Keep Things Professional
Even if you refer to renting space in your home as a side hustle, it pays to treat it like a business. Keep detailed records of your income and expenses. Consider opening a separate bank account as well.
Remember that your standard homeowners insurance policy may not cover accidents or liability that stems from a home-based business. You may need a specific business rider or to add additional coverage.
Don’t: Try to Hide Your Extra Income
In some localities, the income from a rental property, however informal, is taxed. This includes not only investor-owned houses but also houses used as a primary residence.
Do: Be Considerate of Your Neighbors
Especially in areas where housing is dense and peace and quiet are the norm, noise, parking, and increased foot traffic can quickly erode friendly neighbor relations. While you don’t need permission from neighbors to rent out space, common courtesy dictates consideration to keep relations friendly.
Don’t: Blow Off Complaints
If neighbors complain, address the issue promptly. Maybe your backyard dog party is interfering with a toddler’s naptime or your tenant’s music is too loud. Whatever the problem, talk to your neighbor and tenant about potential solutions.
Do: Use Online Platforms
There are plenty of online platforms set up specifically for landlords just like you. Airbnb is just one of many options you can use to get the word out.
Don’t: Stick to One Site
If you only list on one platform, you are missing out on potential tenants. Consider checking other sites to diversify potential tenants. This might include offering a weekend of your kitchen rental for cottage baking businesses, a backyard pool party site, and a platform that specializes in furnished medium-term rentals.
Do: Be Open to the Possibilities
Turning your home into a side hustle is a great way to generate extra income. The overhead is low, you control the scheduling, and the options of how to use the space you already have are practically endless.
With a bit of preliminary planning and thoughtful attention to detail, this is an excellent strategy for building a side hustle that fits seamlessly into your life.
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