How to Turn Your Home into an Income Property

The U.S. economy is slowly staggering out of the Great Recession and employment figures show signs of promise, but after nearly three years of financial drought, many Americans still feel their budgets are under pressure. Faced with depleted stock portfolios and shrunken savings accounts, homeowners looking to pump up their finances may want to turn to their greatest assets -- their homes.

But when we talk about turn your castle into a bank, we're not talking about using it as a home-equity loan cash machine as so many did during the bubble years. We're talking about ways to actually bring in extra income from your property.

The ideas we'll present, while varied, all carry a common theme -- renting out some portion of the property. The degree to which that might intrude on a homeowner's lifestyle varies, too: Renting out your backyard to campers or gardeners, or renting a driveway to frustrated commuters who can never find parking will have more of an impact on your daily life than leasing a 500-square-foot parcel for a cellular tower.

Depending on location, you can potentially make anywhere from around $50 a month to upwards of $5,000, based on some of the ideas we'll present. But before embarking on such a venture, homeowners should thoroughly vet their plans with their insurance broker, check their city and county ordinances -- especially in areas with rent control -- and potentially have a real estate attorney weigh in on the matter if the arrangement with the tenant will be long term.

"Because you are now considered a landlord, you may be liable if a tenant is injured on the property," said Loretta Worters, vice president of the trade association Insurance Information Institute, in an email interview. "Therefore, you may need to purchase landlord insurance. Most landlord insurance policies cover the landlord's legal fees should a tenant file a lawsuit. This type of policy would also pay out in the event of a judgment against a landlord, protecting his or her personal belongings and assets, if the tenant prevails in court." She noted most typical homeowners insurance policies would not cover such events.

Still interested turning your property into an income producer? Then click on the link most relevant to you, and read what industry experts, fellow homeowners and potential tenants had to say to DailyFinance about how to do it:

Renting out the backyard to campers or gardeners

Renting out the driveway or garage for cars or storage

Renting out a slice of land for a cellular tower

How to avoid potential pitfalls

While this list is a starting point, it is by no means comprehensive. Apply your own creative juices to the task of turning your home into an income generator: It could serve your bank account well.