Can You Legally Rent Out Your Garage? (Updated for 2024)

Meta: You can have a great source of passive income if you rent out your garage. Follow these tips to successfully convert your garage into a rental property. 

You probably use your garage to store your cars or unused items. However, renting out your garage is a great way to earn some additional income. You can either lease it out as a storage unit or a living space. But before you get started, make sure you are following state guidelines.

Look at local sites, such as Craigslist, to see if others in your area are renting their garage. You can also check for ads in your local newspaper. If you see ads, then that’s a good sign. Also, check your state’s landlord and tenant laws. These laws help to govern the leasing of residential and commercial properties.

How to Rent Out Your Garage 

Once you are informed about your local regulations, here are some steps to effectively rent out your garage.

1. Clean Out the Space

Before you rent out your garage, clear it out. Use a waste removal company to eliminate any junk that accumulated over the past couple of years. Consider removing your worn-out clothes or sports equipment. Decluttering your space makes more room for tenants to store their possessions.

Sweep the floors to clear off any dust or debris. Use a degreaser to remove any oil spills. Then hose down the garage to get rid of any stains. Hang plastic sheets on your walls to protect them from overspray. Consider using painter’s tape to hold up the plastic.

2.  Secure Your Garage

You want to ensure the renter’s possessions are kept safe. This means adding additional security measures to your garage. Consider arranging your locks so the door closes from the inside. Here are some other safety tips:

• Add a deadbolt and strike plate to your service door
• Lock your entry door
• Cover your windows
• Add motion-detector lighting
• Install security cameras

3.  Partition Your Garage

This step is for if you want to keep part of the space for yourself. You will want to put up some type of divider to separate the rental area from your side. You can either construct the wall yourself or buy one online.

Here are the tools you will need if you are doing it yourself:

• Level
• Sledgehammer
• Tape measure
• Finish hammer
• Chalk line
• Plumb bob
• Circular saw

4.  Comply With Local Rental Laws

When renting out your garage to tenants, first obtain all the necessary permits. Contact your local town hall to make sure you comply with legal requirements. Review the local landlord-tenant laws in your area. As a landlord, you have certain obligations to your tenants.

Here are the main categories these fall under:

• Security deposit
• Disclosure
• Delivering possession of the unit
• Maintenance
• Liability

Your garage will also have to pass an inspection to ensure your space is up to code. How much work you must do to accomplish this depends on your intended purpose. Renting out the space for storage won’t draw as many watchful eyes as renting it as lodging space. 

For example, if you intend to rent out the space as a separate studio apartment, you’ll need to add plumbing and electrical amenities. Each residence must meet bathroom and kitchen requirements and have at least two means of egress in case of fire. While the latter requirement might not be too tough if you have an exterior door and garage door, the former could require some significant renovations. 

5. Consider What to Do With Your Garage Door

When renting out your garage, deciding how to convert your garage door can be a little tricky.  You can either convert it into a wall with a separate exit or turn it into an egress window. If you’re installing the wall yourself, here are some steps to take:

1. Create a blueprint
2. Take off the garage door
3. Construct the framework
4. Finish with the walls and ceiling

You can leave the entryway as-is, too. Just make sure it’s properly insulated.

6. Evaluate the Floor’s Slope

You want to ensure your garage floor is level so water can easily drain out. You can use concrete to level it out. Consider using a slurry or poly slab jacking method. This involves lifting a sunken slab of concrete to raise it.

Here are some ways to determine if your floor needs to be evened out:

• Your garage door gapes open
• Your garage floor tilts toward the house
• Your washer and dryer have stopped working

You must also ensure the floor is free of cracks. Permanent fixes for garage floor cracks include: 

• Patching compound
• Concrete resurfacing
• Carbon fiber strips 

Covering your floor with a fresh coat of epoxy afterward can prevent cracks from recurring and deter stains from spilled beverages. Of course, adding a carpet is a nice touch if you intend to use the space as a living area — such surfaces can quickly freeze toes on chilly mornings. 

7. Connect Pipes and Wires

When you rent out your garage, you want to ensure you properly hook up the necessary electrical and plumbing infrastructure and fixtures. Consider hiring a professional to save you time and stress. Here are some of the steps to installing plumbing to your space:

• Plan the layout
• Install drain pipes
• Install the water supply
• Address humidity issue and add vents

To minimize your costs, have the new bathroom and kitchen closest to the wall connecting to your house. At the lower end, such renovations cost around $3,000 each, although more extensive remodels can increase the price. As a bonus, you’ve added a bathroom and kitchenette to your home should you ever decide to stop renting out the space. 

8.  Determine Your Heating and Cooling Method

You can either have the system connected to your home or purchase a separate heating and cooling unit. Your decision at least partially hinges on whether you choose to rent the space for storage or lodging. Human tenants may add window AC units or space heaters that impact your total home’s electricity bill. It’s ultimately up to you whether you build these costs into the rent. You can also have your tenants foot their utility bills, but doing so requires a separate system.

To get a price estimate, compare the daily wattage of the new unit to your current heating and cooling bills.

To lower your heating costs even more, try these tips:

• Install a door sweep
• Seal windows
• Open drapes during the day
• Change furnace filter
• Install a programmable thermostat

9.  Install the Insulation

Installing insulation is an essential step before renting out your garage. You want to use drywall to cover up your walls. This will help keep the temperature consistent and reduce heating and cooling costs. Insulation is an absolute necessity if you have tenants — you could face legal penalties for failing to provide adequate heat in many jurisdictions. The rule also applies to AC in certain hot jurisdictions, like Phoenix. 

10. Add the Finishing Touches

Now it’s time to add paint to the walls and decorate! Consider using neutral colors, such as whites, for your walls. If you’re adding carpets, go for a lighter color or try laminate flooring instead. Laminate is easy to clean and durable.

Renting Out Your Garage to Earn Cash

If your garage is cluttered with storage boxes, consider clearing it out and leasing out the space. This is a great way to earn some passive income. Before you rent out your garage, check your local laws and regulations. Then follow these tips to convert your garage into a rental property successfully.great way to earn some passive income. Before you rent out your garage, check your local laws and regulations. Then follow these tips to convert your garage into a rental property successfully.