Pros and Cons of Turning Your Home into a Multi-Family Unit

Posted on: 11 November 2015

With small and tiny homes becoming all the rage, what do you do with a large house if you want to downsize but don't want to move? Some homeowners are finding the solution by breaking up their houses into multi-family units. Not only will it allow you to live in a smaller space without moving, but it brings in extra monthly income. 

Things to Consider

Before you decide to convert your home to multiple units, think about what you will gain and what you will lose. 

  • Autonomy—You will no longer be just a homeowner, you will be a landlord, with all that the title entails. You will be responsible for not only the well-being of your own family but also for the tenants in your house. 
  • Privacy—No matter how well your home is constructed, there is going to be noise and there are likely going to be privacy issues. For example, if use of the yard is included, you may have conflicts with tenants as to their having friends over late at night or the yard not being available when your kids want to play.
  • Time—Being a landlord can be time consuming. There are maintenance and financial issues to deal with that will take up your free time. Unless you hire someone to handle after-hours matters, you will have to make yourself available 24/7 in case of emergencies.

What you will gain is obviously income from rentals. If you are an empty nester missing a full house, you may enjoy having tenants for the company they provide. 

Building Codes and Regulations

Before you change anything, check with your local building authority to find out what the codes allow. Your neighborhood may be zoned as single family only, which would prohibit turning your house into multiple units. However, there may be ways around it. For example, it may not be considered a separate unit if it doesn't have a full stove and refrigerator, so creating a studio apartment with a mini-fridge and large toaster oven would be acceptable. Mother-in-law suites are also often not prohibited, and you may be able to rent out rooms if you allow shared use of common areas.

Deed-Restricted Communities

Deed restricted communities often have rules and regulations set up by a Home Owners Association that go above and beyond your local regulations. For example, you may not be allowed to have non-family members living in your home. The HOA rules may consider renting out rooms as running a business from your home, which may be prohibited.  There may also be rules about where and how many cars are allowed per home, with some HOAs forcing all cars to be parked inside the garage.

Turning your home into a multi-family unit is not as simple as setting off an area and renting it out. There are personal, financial, and regulatory issues that must be considered and resolved first. A real estate professional in your area can probably tell you exactly what you need to know, so it would be wise to contact a local agent through a website like to ask questions first.