Making Money With A Guest Home or an Attached Apartment

8335300100_cd967bd9e1_zWe’ve been shopping online for homes a lot lately to get an idea of what we can afford with our home budget. We have fallen in love with a few homes, and some of the homes even have guest homes on the property.

One topic that has been crossing our mind a lot lately is possibly using a guest home (or a guest suite) as a way to make extra money.

It seems like many people are doing this lately. I even came across a blogger the other day who is adding an “apartment” addition to the back of their home so they can make some extra money by renting it out.

However, how do you know if it’s for you? I’m always going back and forth about real estate and being a landlord, but I’ve always heard that duplexes and suites on the same property as where the landlord live seem to do particularly well.

Below are some different areas to think about if you are wanting to have an apartment, suite, or a guest home on your property to rent out:

Will you rent the property to short-term renters or long-term?

Renting short-term or long-term can be a very different experience, so this is an area you should think hard about.

A short-term rental usually has the potential to make more money, but there is also more work to be done since you will usually have to provide all the furniture, clean the property, give the keys to each renter multiple times a month, and more.

With a long-term rental, the opposite can be said for much of the above. The renter will usually furnish the property themselves, they will do all the cleaning, you really only need to bother them once (signing papers and giving them the keys), then hopefully the rent checks just roll in each and every month. However, you may earn less money by having a long-term renter living in your property instead of a short-term renter.

Do you like your privacy?

Since your renter or renters will be so close to you, you really need to think about how much you like your privacy.

If the person is in a guest house, then privacy might not be as big of a deal since they will be in an entirely different building from you. However, if they are in the same home as you are, then privacy can be a much bigger deal.

Sometimes you can solve this by having a whole separate apartment (such as a basement apartment or an above-garage apartment) with a separate door from yours.

For us, we wouldn’t be interested in a connected suite if we had children. However, a guest home on a different side of the property would probably be different. For example, we found one home on 15 acres that had a guest home around an acre away from the main home. This home is what spiked this whole idea to us.

What rules will there be?

If someone is practically going to be your roommate, then you will probably want to set rules. We have rented out rooms in our house in the past and have always set rules.

Sometimes the rules are completely forgotten about by the renter, while other times the rental situation has worked out well.

Different rules may include:

  • Can they have parties?
  • Can they have friends or family members over?
  • What about sleepovers?
  • Are pets allowed?
  • Who cleans?
  • Who is responsible for what?
  • What about noise volumes?
  • Where can they park?

What do you think? Would you ever buy a home and rent out a section of it?

 

Image via Flickr by rowdykittens


Comments

Making Money With A Guest Home or an Attached Apartment — 13 Comments

  1. I would LOVE to have something like this! Make money while I’m young by renting it out and then having my or my SO’s parents move in in their old age. So convenient. Unfortunately, I could never afford something like this in my current area, but one day!

  2. I would definitely consider it but the room or suite being rented in the home would definitely have to have it’s own entrance and utility hook-ups for me to feel more comfortable with the idea. If I rented a room directly in my own home it would more likely be to someone I know very well.

    • Yes, for us it would definitely have to have it’s own entrance from now on. We found a really awesome property with a 3 bedroom guest house that was far from the main house. Seemed like too good of a deal!

  3. Actually, we have thought about this a lot. Even though it would be incredibly cheap to buy a home, fix it up, and rent it out here in Phoenix, Phoenix isn’t necessarily a place we want to stay long term. The other places we would like to move to have incredibly high housing costs, but our goal would be to buy a fixer upper in a student area and rent out to college students.

    I don’t think I would ever rent out a room or suite to someone, just because having people that close weirds me out 😉 However, if the Property Brothers remodeled our home to have a suite, like they do on their show, I’d be soooo up for it! 🙂

  4. Having a renter is a great idea. I’d love to get a duplex and live in half and rent out the other side. What is nice about doing something like this is usually (and I am saying usually) the renter is more aware of being courteous to their neighbors if their neighbor is their landlord. Good luck!

  5. One of the houses we went into a bidding war for had a finished basement with a separate entrance. We initially thought that it was would be great to rent it out and the money could help pay off our mortgage. Well we didn’t end up getting the house and wound up in another house with a finished basement but no separate entrance. Our house is not huge, but it’s a lot of space for just two people. After living in our house for a couple of years, I realize how much I enjoy having privacy.

    If anything, I would prefer to buy a condo or house, not on the same property though and rent it out or pay someone to manage the property.

  6. I want a house with a detached carriage house around back. That would be awesome. I don’t think I want to get any closer than that for a long period of time. I grew up in the boonies and like my privacy! Although maybe I’m just getting tired of living with multiple girls ATM, lol.

  7. We want an income suite so badly. But, we just can’t make the numbers work in our current home. Our goal is to pay this off in just a few more years, and turn it into a rental. Then, our next home, we will have an income suite, and rent that out as well.

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