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I'm thinking of purchasing a house and converting the walk out basement into a rental unit. Has anyone done this? Would I be better off in terms of legalities renting it out to a "roommate" than renting to a "tenant"? I actually rented a place like that a few years ago and it worked out great for me and for the homeowners.
First check local ordinances about having 2 homes in one. Some places prohibit "2 kitchens in one house" or HOA's don't allow this or that. So check out your legalities. Next, get estimates from necessary contractors/carpenters about what it would cost to create this apartment (we would call it an Ohana Unit here in Hawaii). Now, call your insurance agent to find out what happens if you rent out part of your house. This may shock you so be sitting down.
Meanwhile, comp your competition. What are similar units renting for in areas like yours? How's the parking at your home? What Fair Housing Laws might govern your rental unit? (yes, there are different rules for owners renting out less than a certain number of "units" in the building where they themselves also live)
Whether you have a tenant or a "roommate" have a legitimate lease clearly outlining all your policies, terms, conditions and financial issues. How will you qualify these strangers who might live in your home?
Thanks for the info KonaKat! I hadn't even thought of the insurance issues...ugh. I was planning to do it using a property management company so that all of the credit checks, contracts, etc. would be taken care of. A place I looked at yesterday, had a great 1000 sq. ft. walk-out basement with a big sort of mini-kitchen/wet-bar. It just needed a stove/oven added. If I could rent it out for $800 - $1000, it would definitely be worth the hassles. Guess I just need to research the local ordinances.
In this case, you may get a better response if you asked for this thread to be moved to the Denver forum.
You need to call Jeffco and have them fill you in on what is needed if not properly zoned. Also read the CIC docs to see if it's a permissible use.
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