If you own a large house, your kids have moved out and you have more space than you need, you might be thinking about splitting the property into apartments and renting them out. That can give you a stream of additional income, but it can cost a lot up front, and being a landlord can add stress to your life.
Find Out If You Would Be Allowed to Split Your House Into Apartments
Before you start thinking about how to divide up your home and how much you could earn in rental income, find out if you would even be allowed to convert the house into apartments. Zoning laws might stipulate that all the properties in your area must be single-family homes. If multi-family properties are permitted, they might have to meet strict requirements that you can’t meet because of the way your house is designed or how close it is to the property line.
Think About How to Divide Your Home Into Apartments
If you’re allowed to split your house into multiple units, you’ll have to figure out how to go about it. Architectural designs vary widely. Some houses can easily be divided into several smaller units, while in other cases, the owner must add kitchens and bathrooms and make structural changes to create separate entrances.
Contact a local contractor or architect to discuss how you might be able to split your house into apartments and approximately how much it would cost. Then you can think about how you could finance renovations.
Figure Out If Turning Your House into Apartments Would Be a Wise Financial Move
Check recent advertisements and real estate websites to find out how much landlords charge for apartments in your area. When you know how many units you would have and approximately how much you could charge in rent, you’ll be able to calculate the amount you could earn in monthly rental income.
Compare the total monthly costs for the mortgage, taxes, insurance and maintenance to the amount you could generate in rental income. Remember that one or more units might be unoccupied at any given time. Figure out if you could comfortably cover your expenses, even with some of the apartments sitting empty.
Decide Whether You Want to Be a Landlord
Many people love the idea of earning monthly rental income but don’t like the realities of being a landlord. Advertising, screening applicants, collecting rent and handling maintenance can take a lot of time and energy. Dealing with renters can be frustrating, especially if you live in one of the units and tenants frequently come to you with complaints.
You could get your own home in a different area and either visit the rental property yourself as needed or hire a property manager to handle maintenance and other tasks. That would reduce your profits, but it would also leave you with more free time and less stress.
