3 Pros and Cons of Renting Out Part of Your Home

Thinking of getting a tenant? Here's what you need to consider.

If you own a home, there may come a point when you start to think about renting a portion of it out. If your home has a finished basement or separate finished garage, for example, then your living space may be conducive to becoming a rental (provided your local zoning laws allow for it).

But is renting out part of your home a good idea? Here are the advantages and drawbacks to consider.

Pros of renting out part of your home

Here are some of the benefits of taking on a tenant that might make it a perfect fit for you.

1. Extra income

As a homeowner, you have many expenses to deal with, from your mortgage to your property taxes to your homeowners insurance premiums. By bringing in a tenant, you'll give yourself access to monthly income that can be used to help cover those homeownership costs and make your home easier to manage.

2. More help with maintenance

Property maintenance can be time consuming, especially if you're forced to do all of it yourself. As a condition of your rental agreement, your tenant may agree to be responsible for certain maintenance items, like clearing the side of the driveway they park in when it snows. And that could lessen the burden for you.

3. Extra safety

If you live alone, sharing your home with a tenant you trust might give you more peace of mind. And that's an important thing to have.

Cons of sharing your home with a tenant

As great as it may be to rent out part of your home, there are also drawbacks to consider before you jump in.

1. Less privacy

Sharing your home with a tenant could automatically mean less privacy. Even if your tenant isn't particularly intrusive, you'll need to think about whether you're comfortable having another person around all the time when you've been used to living alone.

2. Less space

The space your tenant occupies is space you can't use yourself. If you rent out a finished basement, that'll mean losing that extra living area, or losing out on storage. The same holds true if you rent out a finished garage. Even if you don't need that garage to put a vehicle in, you'll miss out on a place to house your tools or other belongings. Make sure you're OK with parting with that space before advertising for tenants.

3. Having to deal with administrative work

When you become a landlord, there's administrative work that needs to be done. You'll need to remember to invoice your tenant for rent every month, deposit those rent checks, and keep track of the taxes you owe the IRS on that income. You'll also need to go through the initial steps of vetting tenants and putting a lease agreement in place. Plus, if your tenant runs into issues with their living space, it'll be on you to address them.

Should you rent out part of your home?

If money is tight, or you could simply use more of it, that may be reason enough to take in a tenant. But before you do, consider the drawbacks involved. As an alternative, you might have the option to get a side hustle to drum up more income. That could end up being a better solution than inviting someone to live in your home.