The comparison families skip
A spare annexe, converted garage or self-contained floor has two possible futures: rental income, or family. Most households decide on instinct — and instinct usually undercounts what the family option is worth, because rent arrives as a visible monthly number while family benefits arrive as costs that quietly stop happening.
What renting out really nets
Start from the advertised rent for a comparable unit locally, then subtract what landlords actually lose: void periods between tenants (budget 4–8% of the year), maintenance and safety compliance, insurance, letting or management fees if you use them (typically 8–15% of rent), and tax on the income at your marginal rate. A unit advertised at $1,500/£1,200 a month commonly nets $950–$1,200 / £750–£950 after costs and tax — before valuing your own time, and before the non-financial cost of sharing your property line with a stranger.
What moving family in really saves
The family option pays in avoided costs, which is why it's undercounted. Depending on who moves in, the lines include: the rent or housing costs they stop paying elsewhere; childcare hours covered by a resident grandparent (market rate $15–$30 / £12–£25 per hour — even ten hours a week is $600–$1,200 / £500–£1,000 a month); care and support costs avoided at the other end of life; shared utilities, groceries and running costs. Households are often surprised to find the family option matches or beats the net rent — it just does it invisibly.
The asymmetries that aren't on the spreadsheet
- Reversibility. Tenancies end with notice. Family arrangements end with difficulty. If you're unsure, renting out first keeps the family option open; the reverse is not true.
- Regulation. Letting brings licensing, safety and tenancy obligations that vary widely by jurisdiction — and letting to family at market rent can still count as a formal tenancy with everything that implies.
- Charging family rent. Many households land on a middle path: family occupies the unit at below-market rent or an agreed contribution. That can work well — but decide whether it's a tenancy or a family arrangement, write down which, and understand the tax treatment of any money that changes hands.
- The relationship itself. A bad tenant costs money. A bad family arrangement costs Christmas. Weight accordingly — in both directions.
If family is the answer, the next reads are setting boundaries and splitting costs fairly. If you're creating the unit first, start with the conversion cost guide.