I’ve been thinking a lot about home buying. Not that I’m ready to do so, but I definitely think that in 2 years I’ll be in the right place to do it. One thing I really want is a home that allows me to rent out part of the property so that I can make money on it.
Mr Hive keeps talking about how if I get a roommate that will accomplish what I want. Which, while technically true, is not what I want. I don’t want to share my house with someone. I want my own space. I want to rent out a separate part of my house such that the individual does not have access to my part of the house and (except for repairs or pest management) I don’t have access to their part of the house.
In the old city I lived in, it was popular to have detached garages with carriage houses on top. Something like this:
I think these are great. And it seemed that every other house in my old city had something like this going on. It is perfect for a mother in law, a sibling (wouldn’t things have been different if my sister was living there?), to rent out to a tenant, or even for a college kid to live in so they get to stay “at home” but still have their own privacy.
However, in Kansas City I haven’t seen ANYTHING like this. Most garages are attached, and the main house is built over the garage. So I’m not sure that something like this will be an option for me.
What does Kansas City have though? Basements.
One of my coworkers has two college students living in his basement apartment. So I know that in at least some parts of the city this is a legal option.
Of course since I know that this is something that I want to do in a future home I’ll have to factor in the price of converting a basement to a rental property. It will likely add an additional $50-60,000 in repairs depending on the state of the basement when I move in.
I would want the basement to have an outside entrance for private entry, large windows for the living space/sunlight, and at least 500 sq ft that I can convert into a 1 bedroom apartment.
From my calculations, the basic mortgage on a $200,000 house with 20% down (30 years, 7% fixed) would be around $1,064/month. To add the renovations would add $50,000 to the loan, with the same down and the same mortgage terms I’d be looking at $1397/month. So I’d need to rent the apartment for at least $400/month to break even on the investment.
Considering a 1 bedroom in the area I’m looking at goes for around $700/month – this seems completely reasonable.
Have you ever considered having an investment property on your property like the examples above? Or are you like Mr. Hive and prefer just to get a roommate to make a little extra income?