An in-law apartment is a great way to rent a small place to live or make some rental income, if—and this is a big if—they are allowed in the local zoning laws. In-law apartments are separate housing units within a single family home or on the property. They are distinguished by having their own entrance, kitchen, bathroom and living space.

In-law apartments are so named because they are often used to house a family member, such as a mother-in-law, in separate quarters within the house. They also can be used to provide housing for household help, like a nanny. Many zoning laws allow in-law apartment plans as long as the homeowner is not receiving rent on the unit.

Sometimes in-law apartments are part of the original building plan, but they are often a renovated garage or basement or added onto the home. If you already have an in-law apartment or are planning on building one, first check with the local zoning laws for the proper use of this space. Adding an in-law apartment to your property can increase the property value and provide extra rental income. For an older relative, it can provide a private space with a certain amount of independence, but also have caring family members nearby.

If you are thinking about renting an in-law apartment, there are some points to consider. First, while an in-law apartment might give the perfect proximity for a family member, it might not offer enough privacy for a renter. Is the entrance completely separate? Are the walls sound-proof? Is there parking? Can you entertain guests?

It is a good idea for both the renter and the landlord to sign a lease with clear rules, rent payment dates and exact move-in and move-out procedures. An in-law apartment can offer the perfect solution for someone looking to live in a certain neighborhood or wanting a cozy space with lower rent than a traditional apartment complex.