How to Profit From Your Basement Rental

Renting out part of your home can boost cash flow, but first take a look at what it takes to be a landlord.

Homeowners feeling the pinch from the stumbling economy are tapping a source of cash close to home: their basement, attic or extra bedroom. Of course, financial hardship isn’t the only reason to rent out part of your home. This option may also appeal to you if your house feels too big or too empty (perhaps because the kids have flown the nest) or you want to supercharge your savings or pay off your mortgage faster.

How many legal hoops you’ll need to jump through depends on whether you create a separate unit in the basement or share your living space with a housemate. If you rent out a separate unit -- with a kitchen and full bath -- you’ll be subject to municipal rules that govern the conversion of a single-family dwelling into a multifamily one, as well as landlord-tenant laws. But if you share your space, you’re probably off the legal hook (although you should still check out any zoning or homeowners-association restrictions).

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Patricia Mertz Esswein
Contributing Writer, Kiplinger's Personal Finance
Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.