Renting out your basement: Extra income or extra hassle?

Oct 2, 2012

In these tough economic times, it's always tempting to look for ways to bring in extra income. So how about fixing up your basement so that you can rent it out? It would be nice to have an extra $800.00 or so coming in every month. But are there questions that should be answered before moving forward? 

Seattle area real estate appraiser Richard Hagar tells KPLU's John Maynard that if your basement has windows, a separate entrance, and the basic amenities of a studio apartment, then it has the potential to be a rental. The technical name for an apartment like this is an "accessory dwelling unit" or ADU and every city has set up regulations that allow for them as a way to help manage population growth and density. (ADU's also include detatched "mother in law" apartments, as long as they are on your property and your lot is zoned for them. ) The main difference between, say, an investment property such as a duplex and an ADU is that the owner of the ADU  must live on site.

Know your city's zoning laws

Before you do anything, check with your city to get permission to do this. Regulations vary from city to city, says Hagar, so be sure to go straight to your city's website and review its ADU zoning codes.

"For example, in some cities the door to the rental unit has to face the street. In other cities, it's not allowed to face the street."

Keep your neighbors happy

And if you do decide to rent out part of your house, or build a "mother in law" unit in your backyard, keep your neighbors in the loop. Unhappy neighbors can lead to official complaints filed with the city.

All in all, with rents in the Seattle area increasing faster than the cost of buying a home, Hagar says he sees the long-term prospects of renting out modest units in single family homes as a practical way to  bring in extra income.  But he stresses that it's important to keep it legal and, as Mister Rogers used to say on his iconic children's TV show, do your part to make every day   "a beautiful day in the neighborhood."