With the US inflation rate holding between 2.5% and 3% and the scarcity of rental housing expanding, it makes perfect sense to transform that unused basement or garage into a rental that helps both you and your potential tenants. Here are 11 ways to bring in a little extra cash every month.
Renting a spare room or garage: the basics
In general, you cannot just pop a “for rent” sign in the window and start raking in the cash. Most municipalities require safety inspections for residential rental units, including single rooms in your house.
You’ll also need to consider the tax implications of taking in a renter. Rent is considered income, and you’ll need to report and pay taxes on it. The good news? You can deduct many of the expenses you incur with your rental. Talk to a tax professional before moving forward to ensure you understand the particulars of your situation.
When you’re ready, consider these ideas that can transform your garage or basement into a rental goldmine.
1. Create a legal accessory dwelling unit (ADU)
If you have a freestanding garage or outbuilding and your local laws allow it, convert that space into an accessory dwelling unit (ADU). This freestanding unit can be outfitted with a separate entrance, kitchen, and bath. Long-term tenants love an ADU, and these structures can boost the resale value of your home, especially in areas with a tough rental market.
2. Use design to maximize space in studios
Open floor plans with thoughtfully designed and curated spaces are in high demand. Smart storage options, including Murphy beds and built-in bookshelves, are attractive options to renters seeking to make the most of their small space.
3. Keep things private
Tenants are willing to pay a premium for private spaces, including a separate entryway. If feasible, add one to your property or the room for rent. Add a motion-sensor light and a keypad for increased safety.
4. Keep cooking separate
Even a small kitchenette with full-size appliances can make a difference in monthly rent. Tenants appreciate having a separate, private cooking space, and you will, too. Pro tip: properly venting the stove and other cooking appliances means you won’t have to smell any lingering odors from their dinner.
5. Raise the roof (or dig out the floor)
While a garage may have plenty of overhead space, some basements can feel cramped and dark. Increasing the ceiling height by even 12 inches can add value and let you install better lighting to minimize a cave-like vibe, not to mention meet some local regulations regarding ceiling height in rental units.
6. Install soundproofing
No one loves a noisy neighbor, and converting your basement or attached garage into a rental space means adding to the soundproofing so you and your tenant can both enjoy privacy. Bumping up your insulation, adding soundproof panels at floor joints, and using solid-core interior doors reduce noise and allow you and your tenant to coexist peacefully.
7. Provide accessibility benefits
Looking to attract older renters who are downsizing and seeking a quiet space? Make sure your garage or basement utilizes universal design principles to ensure safe access for renters as they age. This includes installing ramps, grab bars, appropriate height switches and outlets, and, where possible, walk-in showers.
8. Offer laundry
In-unit laundry is a major bonus for renters, but you don’t have to install a separate washer and dryer if that’s not in the budget. Even offering access to laundry facilities and a separate shelf where renters can store detergent can justify a higher monthly rent (and maybe lead to longer stays).
9. Furnish for medium-term rentals
One of the fastest-growing rental categories, especially for homebuyers looking to check out a neighborhood before committing to a property, is furnished medium-term rentals. These rentals, which are generally leased for more than a month but less than a full year, typically include everything (rent, utilities, etc) for one price and are also attractive to visiting students and travel nurses.
10. Implement energy-efficient features
Renters, especially those who don’t pay separately for heat and water, can bust your utility budget in the first month, literally flushing valuable profits down the drain. Investing in mini-splits, tankless water heaters, efficient fixtures, and better insulation can lower your overhead costs and allow you to keep more rent money in your pocket.
11. Market like you mean it
Unless you have a steady pool of renters through family, friends, and other referrals, you’ll need to market your basement or garage. Hire a professional photographer to capture the space, and make sure your listing highlights features renters love: dedicated parking, in-unit laundry, and privacy.
Is renting your garage or basement right for you?
The promise of extra money every month might be tempting but take time to consider if you’re ready to be a landlord. There can be significant complications that move in right along with the renter: noise, damage, and late rent are just a few of the issues that could arise. Additionally, your town or city may have specific rules for renting a spare room or garage, with fines and fees for those who don’t follow them. Take the time to consider the impact a renter might have on your daily life before becoming a landlord.
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