How to Convert a Garage or a Spare Room Into a Rental Property and Earn Extra Income

If you’re looking for a way to invest in real estate without breaking the bank, converting your garage or an extra room into a rental property is a great option. With some basic renovations and a bit of creative thinking, you can turn your extra space into a comfortable and stylish rental that will attract tenants and maximize your return on investment.

Some considerations to keep in mind when planning your conversion:

  • Do you have a space that can be easily converted, such as a detached garage an unfinished basement, or an extra room that can be outfitted with a separate entrance?
  • Do you need permits and approvals from your county to operate a rental unit?
  • What is the local market rent for similar units in your area?
  • What are the zoning regulations in your neighborhood that may impact your ability to rent out your space?
  • How much it will cost to convert your space?

Which Extra Space Can You Convert Into a Rental?

I am not talking about a shared room. These can be disrupting especially if you have a family and are also not secure. The ideal space should have a bathroom already and it should be large enough with the possibility to add a separate entrance.

Here are a couple of examples:

As you can see from the first example, the room doesn’t have to be fancy. If you read the reviews, the most important attraction is the proximity to Tampa airport. This extra room can bring in an extra $1,000 per month, assuming the current occupancy. The room is completely contained and separate from the main house.

Here is a garage conversion that was more upscale. No doubt the owner will be able to demand higher rent for this space.

This couple converted their garage and their van. They rent the rest of the house and live in the garage when they are not traveling.

With a little imagination, you can turn even a one-car garage into a livable space as this owner did.

Make Sure the Rental is Legal and Up to Code

The first step is to consult with your local zoning department to make sure that converting your garage into a rental unit is permitted in your area. Once you have the green light, it’s time to start planning your renovations. Depending on the condition of your garage, you may need to do some minor repairs or even a complete gut job. If most of the remodeling is interior, you may be able to skip this step.

Decide on Short-Term Guests or Long-Term Tenants

If you live on the property I am sure you will have additional considerations in addition to how much extra cash you can make.

Some people only want short-term rentals, such as those who are traveling for business or pleasure and need a place to stay for a week or two.

In this case, you’ll want to make sure that your garage is outfitted with all the necessary amenities, such as a bed, dresser, television, and Wi-Fi.

If so, then you will want to find a way to list your rental on sites like Airbnb or VRBO or advertise it as a corporate rental. There are also some housing websites for traveling nurses that are good places to advertise.

Check Airbnb and VRBO for similar properties and check prices and most importantly vacancies.

On the other hand, if you would prefer long-term tenants, then you will want to make sure that your rental unit offers amenities for long-term tenants like a kitchenette.

The positive of a long-term rental is that there is a lot less work for you as the owner. You will have a more consistent income, and once you find a tenant, they will likely stay for several months or even years.

The downside is that long-term rentals generally fetch a lower price per month than short-term rentals. Currently, this may not be true because the rental prices in most metropolitan areas have skyrocketed. Research both short-term and long-term prices in your area.

How Much It Will Cost?

This is a hard question to answer. Garage conversion with a separate bathroom and kitchenette could cost between $50,000 in the low end up to $120,000. It all depends on what you need to do.

The biggest expense is the plumbing especially if you don’t have a bathroom in the garage already. You can use our rehab calculator to get a rough idea of what your conversion will cost.

Converting a spare room with an existing bathroom will cost a lot less because the only extra cost will be creating a separate entrance, maybe installing a separate mini-split AC/Heater so the guests can control their own temperature. This conversion could be done easily with $5,000 to $10,000.

If you have decided to create a rental, look around your property and decide which will be the easiest way to get started. Once you get some cash and experience, you may change things.

This is the easiest way to house hack, save money, and get started with real estate investing.

About the author

Jana Christo is a business owner, real estate investor, and property manager. She has 16 years of experience in most areas of real estate.
During the last recession, she was also the managing partner for a company that bought and rehabbed properties from the court foreclosure auctions. Today, she manages her own portfolio of rental properties and shares her experience on