Answering the Age Old Homeowner Question: Should I Rent Out My Basement?

Anyone with extra space in their home has asked themself, should I rent out my basement? The opportunity to make an extra few thousand dollars is huge, especially while paying down your mortgage.

If you’re conflicted on whether or not you should move some neighbors downstairs, this pros and cons list should help you come to a decision!

The Cons of Renting out My Basement

• Less Recreational Space for You

• Parking Becomes Tighter

• Increased Chances of Liability or Damage to Your Home

• Potential of Signing Disruptive Tenants

The Pros of Renting out My Basement

• Steady Flow of Passive Income

• Pay Down Mortgage Faster

• Additional Funds Allow for Home Improvements

• Sense of Security While Traveling

Here’s Why You Shouldn’t Rent out Your Basement

Less Recreational Space for You

A tenant in the basement means less room for you to entertain, have family or friends visit with private space, or to make a recreation room for your kids. 

If you’re going to make the move, you have to be ok with losing that free space.

Parking Becomes Tighter

This factor is dependent on your style of home and location. 

If you have a narrow driveway you could be forced to jockey cars, and if you live in the city, you could be inviting one more car to the street parking competition. 

Increased Chances of Liability or Damage to Your Home

There’s a chance your home insurance could be increased when renting out your basement. 

When you add other people to the mix, there is an increased risk of fires, floods, and general wear and tear to your home.

Of course these are rare occurrences, but no one ever expects the worst case scenario, except insurance companies.

Potential of Signing Disruptive Tenants

Loud and disrespectful tenants who fooled you during the application process can be worse than a flood or fire.

This is a real risk to consider, because accidentally signing tenants who disrupt your sleep, or don’t take care of your property may require serious actions like eviction. 

Finding the wrong match could add undue stress and make you regret opening your home to the public in the first place.

Here’s Why You Should Rent Out Your Basement

Steady Flow of Passive Income

An additional $1000-$2000 per month is unquestionably the most persuasive reason to rent out your basement. 

This is money that you’ll have to do very little to collect month to month. Of course, you’ll have your duties as a landlord, but if the home and unit is in good condition, you’ll be stacking passive income!  

Pay Down Mortgage Faster

The additional income will help you pay down your mortgage faster, and could potentially cover the entire cost of your monthly mortgage payment (depending on the loan amount and the rent you charge etc.).

Getting free of your largest household expense faster is priceless.

Additional Funds Allow for Home Improvements

The additional income will allow you to make home improvements to the main areas of the home that you inhabit.

You could make more of these improvements with cash from the rent you collect, and over time add value to your property.

Sense of Security While Traveling

Having great tenants is almost as appealing as having passive income. If you're an empty nester looking to travel, knowing that someone is at home just in case of an emergency brings a sense of calmness and security.

The relationships you might develop over time with your tenants can help you live a lifestyle that allows you to travel more for pleasure or business.

I want to Rent Out My Basement, But it Needs Repairs

If you feel moved to take the leap and rent out your basement, but it’s not in the right condition to be lived in, you’ll need to make some repairs to market the best unit possible.

If you’ve created equity in your home over the years, you have the ability to unlock that money and bankroll a desirable basement renovation that makes you thousands of dollars in passive income per month.

At Sherwood Mortgage Group, we can set you up with a Home Equity Line of Credit, or a Construction Mortgage through our lending partners so you can create the best basement apartment possible.

Give us a call at 1-(877)-241-6001 to speak with our team to get started!