Converting Your Property to Produce Income

           Should you consider planning on converting your home to generate additional income? In slow times, the additional income can help to cover your mortgage or household expenses. 

 The first thing to consider before converting is- Is it legally permissable? Check with local zoning boards first to see if approval is needed to convert a portion of your home to an “accessory dwelling unit” or apartment.  

Ignoring local zoning rules can be costly and the penalties of putting in an illegal apartment can negate the future possible income.  If your home is in a community with a property owners association, you should also check with them as some private subdivisions may have restrictions even if the city or county does not.

Is it practical and feasible to convert the property to an apartment unit? Homes that have a hillside walk out basement tend to  be more practical to convert then a second story which may need additional plumbing and electric for an upstairs kitchen and the cost of a making a separate entrance.

Would be landlords should also ask themselves if they are willing to give up some of their privacy, as some units may share common walls or areas such as stairways or hallways. Tennant will likely use a common driveway and some additional site work may be necessary for adequate parking.

Owners should be aware of what units similar in size and utility are leasing for and if there is an adequate demand in their area.  If the rental market is slow, you may need to reduce your price at first to attract long term renters.  Realtors that offer property management are very knowledgeable about their local market and may be able to help you determine what features are desired by tenants and what your unit should rent for.

 

 

Sources:

Hot Springs Appraisal Services,  May 2010

Realtors Magazine, February 2010