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How to Rent Your Downstairs Apartment

by Phil Silverwitz

Overview

With fewer people able to buy new homes, more people are looking to settle down in rental facilities. Therefore, you should consider taking advantage of a weak market by renting a downstairs apartment if you have one. Renting a room within your home is a creative way to generate money in a bad economy. But it's not as easy at it may seem. You'll need to take several important steps before the cash begins to flow into your wallet.

Step 1

Make sure that the unit is self-contained. Although they are not absolutely necessary, amenities such as a full bathroom, kitchen, and separate bedroom make an apartment much more attractive to a potential renter, especially when that person will be living within another person's home. Check with a certified public accountant to see whether some of the home repairs to your rental property are tax deductible.
Step 2

Check with your local building and zoning department to see whether your town requires you to have a license in order to rent a property. Many municipalities require that the rented property be inspected for suitability. For instance, the city of Philadelphia requires that landowners provide a license stating that the fire alarms are working and the structural integrity of the building is sound.
Step 3

Draft a renter's agreement. Be specific about your expectations. Be sure to collect a refundable security deposit in the event that the renter does damage to your home. Make multiple copies of the signed and dated agreement. You will not regret being too nit-picky in this regard.
Step 4

Advertise your apartment. Free advertisements such as Craigslist work well, but don't underestimate word-of-mouth advertising either. When it comes to someone living in your family's house, you will want to find a trustworthy, reliable person. Finding someone you trust who can vouch for the person's character may be a better option than attracting someone randomly from a website or street sign.

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If you do not own the facility you plan to rent, check with your landlord to see whether subletting is allowed. You may have signed a contract in your lease saying that it is prohibited. Money you receive from tenants is taxable income, so be sure that your tax statements accurately reflect this.
If you do not own the facility you plan to rent, check with your landlord to see whether subletting is allowed. You may have signed a contract in your lease saying that it is prohibited.
Money you receive from tenants is taxable income, so be sure that your tax statements accurately reflect this.