You have a house, but you're feeling the squeeze and starting to sweat the mortgage payments. Meanwhile, would-be homeowners are dying to move into your neighborhood but can't convince their skittish bank to approve a loan. Renting out an accessory apartment - that's a complete, private apartment within an owner-occupied home - could solve both your problems by providing a home for them and income for you.
Other ways your home can bring in extra cash.
In the Town of Huntington, for instance, it's an option that's gaining interest. The number of inquiries about applying for an accessory apartment permit and the number of application packets that have been picked up have increased, says A.J. Carter, town spokesman.
But there's a lot to consider before slapping up an "Apartment for Rent" sign. Several things can stand between you and a legal accessory apartment. Here are the top five hurdles you'll have to clear to make it happen:
There's a lot of it, and it's different for each municipality.
Before doing anything else, call to make sure your area is zoned to allow two-family residences, says Joseph LaFace, chairman of the Nassau County Bar Association Real Property Law Committee. If your home is within an incorporated village, apply to the village. Otherwise, apply to the town. The rules may surprise you: For instance, in homes regulated by the Town of Hempstead, only senior citizens or families with a mother-daughter arrangement can get a permit.
An application might require a copy of your deed, detailed floor plans with measurements, copies of the certificate of occupancy for the main dwelling and any additions, a survey of the property showing all structures, identification such as a driver's license, several proofs of residence, photos of the driveway and the front of the house, and a building permit application for any planned changes.
The entire property also has to pass an inspection.
You'll have to notify your neighbors by mail. Expect to go through a public hearing, followed by a lengthy review period. In the Town of Babylon, the Accessory Apartment Review Board usually takes four to eight weeks to render a decision after a hearing.
An accessory apartment can be a sound long-term investment, but initially it's not cheap. The fees alone can add up quickly: There are application and permit fees (in the Town of Riverhead, for instance, it costs $150 just to apply and, if approved, another $500 for the permit).
And if you have to make physical changes to get the place up to code, it can take some time to get back in the black.
The apartment permit will be valid for a specified period - usually between one and five years - after which there's a renewal fee of anywhere from $50 to $500. Some areas will allow you to take over an unexpired permit from the previous owner. The fee for a permit transfer in the Town of Huntington is $125.
Other costs stand to increase as well. A higher assessed property value can lead to an increase in your taxes. And your homeowner's insurance provider may require additional coverage for the apartment, LaFace says.
If you bought a house with an apartment that's already up to code, you may be able to recover most of your expenses pretty quickly: The asking rent for a one-bedroom apartment in a house throughout the region typically runs between $900 and $1,850 a month, according to current rental listings on the Multiple Listing Service of Long Island. If you're completing an unfinished space or building an addition, the construction costs will take considerably longer to recoup.
The list of space requirements for an accessory apartment is long and specific. There are rules about lot size and the number of off-street parking spots you can provide. There are minimum and maximum apartment sizes allowed, depending on the size of the house. In the Town of Brookhaven, the apartment must be at least 300 square feet and can't be more than 650 square feet without special approval. The rental unit also can't exceed 40 percent of the home's habitable space.
And speaking of habitable space, it's a good idea to learn what qualifies as such. If you were considering a basement apartment, don't get your hopes up: There are grade, light, ventilation and ceiling height requirements that Long Island basements rarely meet. And in a legally habitable bedroom, the door can't be the room's only exit: Any room used for sleeping needs a second point of egress - that's an escape route big enough for an adult to climb out, or a firefighter to climb in. An egress window can cost $2,000 to $3,000 to install. And don't forget the apartment's private entrance - it's a must.
Your neighbors may not be as excited as you are with your bright idea. "Sometimes, a variance may be required. If it is, the odds are they probably won't get it because the neighbors are going to say they don't want it to be done," LaFace says. "They're worried about school overcrowding, parking cars, more strain on the road," he explains.
Squabbles over traffic and parking, noise and eyesores such as extra trash cans and multiple satellite dishes can quickly turn a neighborly relationship sour. To avoid trouble, keep things as attractive as possible, and don't break any laws.
Also, like-minded neighbors vying for their own permits may see you as competition: There can be a limit to the number of multiple-family dwellings allowed within a given area. The rule in the Town of Brookhaven is that no more than 5 percent of the lots within a half-mile radius will be granted a permit without a variance.
An array of regulations govern who can rent from whom. One type of restriction is a relatives-only rule. Sometimes, it's even stricter: The Town of Oyster Bay allows only a parent or child of the owner to use the apartment.
"The regulations in our code are designed to allow accessory apartments under certain circumstances, which ensures that they meet all building and safety codes while protecting the traditional suburban character of our communities," says Town Supervisor John Venditto.
Once you've figured out who qualifies, "The biggest thing to do is screen your tenant," LaFace says. "Do a credit check. Make sure you have somebody who is going to pay their rent on a timely basis." If you're using a Realtor, the agent can help. If not, there are services that offer a tenant credit report and criminal background check for a nominal fee.
After your renter makes it through the vetting process, it's still important to protect yourself. "Get a security deposit upfront," LaFace advises. "A lease binds both parties," he says. Even if you opt not to have a lease, "make sure there's an understanding as to what rights the tenant has. . . . It might help to put things in writing."