The conversion of self-built housing for rental is not informal: it is a process generated by State-led regeneration or ‘upgrading.’ Since the 1980s, access to housing in low-income, Brazilian settlements has been shaped by a range of upgrading approaches and shelter types. Almost thirty years later, upgrading has been abandoned in favor of mass housing (Stiphany and Ward, 2019). In the absence of housing policy, new patterns and processes of informal rental are developing. Drawing on data collected in the context of a large-scale comparative study of upgraded informal settlements in São Paulo, Brazil, this paper analyzes the social and physical dimensions of how informal housing is being subdivided for rental, and (1) presents the nature and extent of rental conversion across two large settlements; (2) describes how different rental conversion typologies interact and reinforce one another; and (3) analyzes competing narratives of people involved in rental –builders, landlords, renters, and people displaced by the rental market. My analysis reveals that evolving rental typologies are created by sanctioned and unsanctioned policy patterns and construction processes. The rise in rental meets a growing demand for flexible low-income housing arrangements, yet is leading to gentrification and precarious living conditions. I conclude with a discussion of policy and planning solutions for alternative approaches to upgrading that prioritize secure rental at lot and building scales.