Thinking of renting out your basement for extra cash?
It seems that everybody wants to be a landlord these days. Some are thinking duplexes or doubles, but others are actually looking to split up the house somehow or convert the basement with a separate entrance.
While reactions to the latter type of rental can vary widely by community, it's certainly not the "you're kidding, right?" decision it once was. And being a part-time landlord may have more appeal as boomers age and look for ways to supplement their incomes.
Easy money? Well, that's what many people, including Scott McGillivray, the host of Income Property, would have you believe.
In case you haven't seen it, Income Property is an HGTV home-improvement show in which McGillivray rescues cash-strapped homeowners and teaches them how to supplement their mortgage payments by adding a rental unit to their house.
Seemingly in the blink of an eye and for little money, he creates beautiful income suites which usually end with dazzled homeowners pocketing an extra $1300 a month in rent.
But that's where it stops (it is TV, after all).
No real talk of financing, permits, zoning, codes, inspections, insurance and a steady parade of expenses and hassles. Like finding and then getting rid of tenants, carrying an empty property, spending time in court, making sure the fire alarm and exits work, repairs, removing snow, and arguing about who has use of the backyard.
And if you do actually get that far, there are the tax implications, warns Tim Cestnick, CEO of Waterstreet Family Wealth Counsel. While legit expenses are deductible and can even offset income from other sources, you have to approach things like a business.
You can't, for instance, rent out the property to one of your kids on the cheap and then write everything off, he explains.
Do you rent out part of your home somehow? How have things been working out?
By Gordon Powers, MSN Money