Renting an accessory dwelling unit

[Katie Stroman]

I recently purchased a SF home with an ADU. One owner used it as an in law suite and another as an office. It is fully functional with a full bathroom and kitchen and over 700 square feet of living space.

I've been told by the sellers agent and a neighbor that has lived on the street for 30 years that it is not permitted by the town to be used as  a multi family and is highly unlikely that they would ever approve it for that use. 

My question is does anyone have experience with renting out "illegal" units? What are the consequences? How do they prove that it's a rental? What if you rent to a friend and they pay you cash. Wouldn't it just appear as if you have a guest? How do they prove that you are renting? 

Thank you for any insights. New to this and want to do a house hack but also concerned because I don't want to cause any trouble. 

[Andrew Kerr]

Hi @Katie Stroman - folks all across the country do this. The way I might approach is: similar to renting a room in your house. You wouldn't ask the city to rent out a room in your house. Now some cities do put restrictions on the number of unrelated individuals living under one roof - but these tend to be old hold over laws that were written to stop boarding houses. 

Where you could run into an issue is if a neighbor complains to the city. And the city has a law or ordinance that says you cannot live full time in an ADU. Or cannot rent an ADU.

Another option would be to look at renting it on airbnb. Again I don't know your local regulations, but you might be able to make more using it as a short term rental and have folks be there less than a long term tenant would be.