Today it seems that everyone is looking to make some extra money. From side hustles with multi-level marketing companies to freelance writing and graphic design, the options are endless. But what about a more traditional, passive route to extra income, like becoming a landlord?

You don’t even have to invest in a rental property. If your home has extra, unused space – like a garage – you can convert this into a liveable area for a renter. And not only can you profit from the rent you charge, but you may become eligible for an extra tax break, too.

Before you can reap the benefits of renting your space, you’ll need to convert your garage into a proper living space. The decisions you make during this process will have a huge impact on how successful you are in renting your space, but we can help. Read on for our seven tips for converting a garage into an apartment that you can rent out for some extra cash flow.

1. Learn About Converting a Garage Into an Apartment

Transforming a space once meant to house your car, tool bench, and Chrismas decorations into somebody’s home requires a lot of unique work. This type of home renovation usually involves several smaller projects within it. You may need to raise the floors, insulate walls and ceilings, complete electrical and plumbing work, replace doors, and add windows.

With so much detailed work needed, planning is one of the most important steps. Do some research, set a realistic budget, and come up with a smart plan. Find a reputable contractor to work with, as well as electricians and plumbers and other professionals as needed.

2. Get all the Necessary Building Permits

Even if you work with a contractor, you’ll need to know what permits your project will require and how to get them. You’ll likely need permits to alter walls, rewire electric panels, and add or upgrade a plumbing system. If you skip this vital step, you may face large fines later.

Call your local municipality to discuss your project and find out what permits you’ll need. You should also ask about the building codes and safety standards. Your garage apartment will need to meet all codes and pass inspection if you want to be able to rent it to a tenant.

3. Make Your First Decision About the Garage Door

Before you start to plan any other detail, plan what you’re going to do about the garage door. You’ll need to consider your budget, of course, as well as any HOA rules. Also consider things like insulation, convenience, and aesthetics.

You can transform the garage door into an exterior wall, or for a bit more money, you can convert it to a window. If you decide you leave it as-is, you can learn more here about options for insulated garage doors. No matter what, you’ll also need to add a traditional residential door for the garage apartment. 

4. Take Careful Consideration with Planning for the Floor

The flooring part of this project is more important and requires more consideration than you may think. First, remember that garages usually have sloping floors to allow water to easily drain. This means you’ll need to measure the slope and have it leveled out.

You may also need to raise the floor to accommodate insulation over the original concrete slab. If you’re planning on wood flooring or carpet, you’ll need to install a subfloor over the concrete. Tiling, though, is easy to install on an existing concrete floor, and even painted concrete flooring can work in a minimalistic space.

5. Invest in Insulation and Other Temperature Control Measures 

As mentioned earlier, this once uninhabited space will be a home for someone, which means it will need temperature control. Installing extra insulation in the ceiling and exterior walls is a good start. Then, you’ll also need an efficient way to warm and cool the space.

If it’s an attached garage, you can wire it into the same HVAC system as the rest of the house. If the garage is not attached, you may need to use space heaters or window AC units. This second option is often the more affordable solution in the long run.

6. Plan and Budget for Electrical and Plumbing

This part of the project can eat up a lot of your budget, so be sure to do your research and plan accordingly. It’s best to partner with professional electricians and plumbers for this part, too. Again, if it’s an attached garage apartment, this will be a little less costly, as you can run the lines through the exterior wall of the main house and into the apartment.

If you can situate the bathroom of the apartment to share a wall with a kitchen or bathroom in the main house, this can also be helpful. With a detached garage, you’ll need to run the pipes underground. The further the pipes and wiring need to travel, the more expensive this part of the project will be.

7. Design the Space for Optimal Efficiency and Comfort

In the end, the most important result of your garage conversion is a space that is comfortable and pleasant enough for a tenant to pay to live there. A one-car garage should become a studio apartment. If you have a multi-car garage, you may choose to add interior walls to define different rooms in the apartment.

Either way, choose a simple design with clean lines. You want this space to feel open and light, so the tenant truly feels like they’re in their own space. Consider minimalistic, industrial design aspects and stick to light paint colors.

Learn More About Rental Properties and Real Estate

Converting a garage into an apartment is a huge undertaking, and may not be the best option for everyone. If you want to learn about other ways to make money through real estate, check out our real estate investing basics. You can also browse our blog for tips on other home renovations or advice for buying a new home.