A mother-in-law apartment, also referred to as a guest house or in-law suite, is a residence located on the premises of a larger residence. It can be detached, in the basement, above a garage or located in the main residence as an addition. Most consist of a small kitchen area, bathroom, living room and bedroom. The size and extent of the accommodations depend on the needs of the occupants as well as zoning laws.
An in-law apartment can be a major selling point when you are buying a house. It is a perfect guesthouse for short-term family or friend visits or long-term stays, if a family member is moving in with you. The question arises, however, what can you do while the apartment is empty. Some homeowner’s choose to rent it out.
Short-Term Rentals – St. Petersburg
St. Petersburg has specific regulations regarding short-term rentals. For properties within the City of St. Petersburg, short-term rentals are only allowed up to three times within any consecutive 365-day period, unless the property is within a zoning district that allows the hotel or motel use or a special “overlay” approval has been obtained. (https://www.stpete.org/planning…/Short%20Term%20Rentals%20HANDOUT.pdf)
The Pros of Renting an In-law Apartment
Source of Additional Income
The most obvious benefit for homeowners is the ability to make extra money with a space they are not already using. Because of their separate entrance, in-law units offer homeowners privacy and a sense of distance from their renters.
Attractive to Renters
In-law units are also attractive to renters because they are part of a home and likely to be located in a neighborhood largely made up of single-family homes. And, if yours is already furnished, you have the advantage of being able to list it as a furnished unit for short-term rental on sites such as Airbnb or HomeAway.
Increases Value of Your Property
An in-law suite can increase the value of your home under the right conditions. You need to take into account market conditions and construction costs to ensure that your initial investment in an in-law suite reaps a higher value for your home. Additionally, the extra living space is particularly attractive to buyers with large families.
The Cons of Renting an In-law Apartment
Before you rent out your in-law unit, ask yourself if you are ready to deal with a tenant in your personal space. Despite having a separate entrance, the tenant will still be living on your property and at some point you will both have to have some personal interaction.
Because renting out an in-law unit is legally equivalent to renting out any other piece of property, you need to follow the laws of your local municipality. In the case of a short-term rental such as an Airbnb, you may be required to collect occupancy taxes, register guests, and sometimes obtain a license from your local authorities.
Renting out your in-law apartment can also have an effect on your homeowner insurance policy. Be sure to contact your insurance agent before you advertise the rental. Because renting is defined as a business activity, your typical homeowner policy will not cover losses related to your rental.
Bottom Line – Having an attached or detached mother-in-law apartment is a great way to increase the value of your home, improve its resale potential and make extra income – BUT before taking the plunge of listing it for rent, be sure you weigh the pros and cons and thoroughly check your municipality’s zoning ordinances.
In-laws, Outlaws, and Granny Flats: Your Guide to Turning One House into Two Homes, by Michael Litchfield