The Parts of Your Property You Can (and Can’t) Rent to Tenants
Renting out a room or other space on your property can bring in extra income, but not all areas are suitable (or legal) for occupancy. Read this before you sign a lease to bunk in someone's garage.
Skyrocketing rent has forced some tenants out of the traditional rental market, sending them in search of less expensive living quarters. This situation provides a unique opportunity for homeowners to rent out a room or two. It effectively provides a tenant with a place to live while allowing the homeowner to make a little extra cash.
Be aware, though, that you cannot rent out all areas of your home—rental properties must meet specific requirements. While housing laws vary by state and community, virtually all have general rules for rentable spaces. Keep reading to find out which parts of your property you can rent and which ones you can’t.
The space must come with vital services.
The most common space homeowners rent out is a spare bedroom, but you can’t rent out the room unless you allow the tenant access to vital services. This means you must make provisions for the tenant to access a bathroom, hot and cold water, and power (electricity, gas, oil, etc.). If the room comes with an attached bathroom—as most master bedrooms do—it’s an optimal space to rent out. If it’s a standard bedroom, you’ll need to make arrangements for the tenant to use a shared bathroom.
The requirement to provide vital services keeps the homeowner from renting structures that aren’t finished as living spaces, such as garages and outbuildings with no plumbing or electricity.
The space should be approved for occupants.
While renting out a bedroom is usually allowable, renting a storage shed as a living space probably isn’t. In addition to state landlord/tenant laws, communities often have additional occupancy requirements that restrict property owners from renting areas that are not approved for use as living spaces.
Depending on a community’s zoning restrictions, homeowners may be able to convert a garage or large shed to an approved living space by installing plumbing, heat, and electricity and bringing it up to occupancy standards. Such a structure might then be accepted as a guest house or a mother-in-law’s quarters.
Occupancy laws can make renting some spaces illegal.
Occupancy laws vary from state to state, but federal law requires landlords to allow two persons per bedroom. However, most local occupancy standards are not based on how few occupants are permissible in a given space, but rather how many. For example, a community’s local occupancy ordinance may only allow a maximum of two persons per 100-square-foot bedroom. In contrast, another community may allow three or four occupants, especially if they are small children. Check with your local zoning administrator before renting a single room to more than two occupants.
Subletting might violate a leasing contract.
Like homeowners, tenants can also benefit from renting out part of their living space. If you’re a tenant and need extra money to help pay the bills, subletting a room to another tenant might sound like a good idea, but it’s probably a violation of your rental contract. Landlords typically want to vet potential tenants themselves; check their credit ratings, and check with their former landlords. Subletting a room in your rented apartment or home could result in eviction, so talk to your landlord before subletting.
A rented room must have an emergency escape.
For some homeowners, renting out the basement seems like a good idea, especially if it has an entrance from outdoors, which offers a modicum of privacy. However, you probably can’t rent out the space unless the bedrooms (or other sleeping areas) offer an emergency exit (besides the door).
Many basements have only small ground-level windows, but to qualify as a living space, an approved ingress/egress window is necessary. This is a window that offers a minimum opening of 5.7 square feet and is no more than 44 inches above the floor. Usually, a City Inspector will be able to tell you whether a window qualifies as an ingress/egress window.
Minimum safety requirements apply.
If you rent a room or other part of your property to a tenant who becomes injured on your property, you may be liable if the property doesn’t meet reasonable safety standards. Local ordinances vary, but minimum safety standards often include having a secure lock on the door, working smoke detectors, and protection from known hazards, such as having a fence around a swimming pool to deter children from falling in.
In addition, your homeowners’ insurance policy may cancel your coverage if you neglect to provide reasonable safety standards or if you rent out part of your property without first notifying the insurer.