Want to Rent Out Your Basement? 6 Questions to Ask
Tapping your subterranean space can help you bring in extra monthly income. Here’s what to consider first
With real estate prices high in many areas of North America, renting out part of your home could be an appealing way to help cover your mortgage. And if you’ve got a basement, it could offer great rental income potential. But first you need to size up your basement to see if it has what it takes to become a rental unit. Whether you are looking for short-term tenants or more permanent ones, these six questions can help you decide.
1. Is my basement deep enough and dry enough? Some basements just don’t work well as apartments due to their depth, which translates to ceiling height in a finished basement. Potential tenants will be looking for sufficiently high ceilings. Generally, 7 to 8 feet is a good height for basement ceilings, although some building codes require only about 6½ feet. Be sure you check on this requirement before you do anything.
Also, having a dry basement with no moisture problems is important. The basements of newer homes tend to have higher humidity levels during the first year or two, due to the recent excavation. Sometimes setting up a dehumidifier is all you need to take care of the problem. But if you have water coming in whenever it rains, there may be a bigger problem lurking in your foundation. I recommend calling a good general contractor for an assessment as a first step. If you have any humidity or water-related issues, it’s wise to take care of them before converting your basement to an apartment. If you don’t, lingering problems could ruin any drywall or flooring.
2. Do I have a separate entrance? You might be lucky and already have a separate entrance to your basement. This is the ideal setup if you’re looking to have somebody live in your home but want to keep the main entrance off-limits. A separate entrance keeps your tenant’s comings and goings more private and less noticeable — for both of you — than if your renter entered through your house.
This photo shows a basement with a walkout to the outside. Having a separate entrance not only adds privacy, it’s a safety measure. In case of emergency, the second exit provides another way out.
3. Do I have egress windows? According to the International Residential Code, you cannot have a bedroom in the basement unless there is a large enough window, called an egress window, that opens and can allow a person to escape through it in an emergency. To find out what the requirements are in your area, start by calling your city or county. In some cases, they will require that the window be in the bedroom, while other times it just needs to be on the same level. Without an egress window, a basement apartment — whether you’re renting it out or not — is a no-go. If you need to make changes to get your egress windows up to code, a local contractor can help you comply.
4. Do I have the appropriate fire-rated materials? Typically, basement apartments need to either be made from fire-rated materials or have a sprinkler system installed. In my experience, many finished basements don’t meet either of these requirements. Again, check with your municipality or county for what is required. Some jurisdictions require an inspection by the fire department. The inspection may include verifying that your walls, ceiling and separation doors (the door separating the apartment from the main part of the house) are composed of fire-rated materials. If you don’t meet these requirements, a general contractor can assist you.
5. Can I get insurance coverage for a basement apartment? Call your insurance company ahead of time and let them know what you plan to do. It is in your best interest to notify the insurance company that you intend to add an apartment, as well as when you first have a tenant living in it. If you skip these important steps, you may not be covered in case of a fire or flood. All insurance policies are different, so speak with a representative at your insurance company about your plans — and do this before you start any work.
6. Do I want a kitchen or a kitchenette? If you have the space for it, a full kitchen with ample counter space is nice to have in a basement apartment. Plus, including this amenity may allow you to command a higher rent.
But for many renters a kitchenette, like the one shown in this photo, would be fine. It has all the basics one would need for solo living: a small fridge, a dishwasher drawer, a stove top and a small convection oven.
But it’s important for you to consider how your financial investment will pay off. Before you determine your plans for the basement’s kitchen, I recommend you consult with kitchen designers or general contractors who can price out various options. That way, you can figure out how many months of rent it will take to recoup your investment.
You would also be wise to look into ways to save on a kitchen addition, including installing parts from previously used kitchens (cabinets, counters and appliances) that you can find at a Habitat for Humanity Reuse Center, or online through marketplaces like Facebook.
One caveat: Do check with your municipality’s requirements on the minimum cupboard space you must provide, as this varies by jurisdiction.