How Seniors Are Turning Their Homes into Sources of Income
A house can be more than just a place to live. With the high cost of living, some older adults are choosing to turn their homes into an income source.
There are several ways to do this, and they can pay off. You can generate enough cash flow to help cover mortgage payments, utilities and other expenses. Learn about other strategies that real estate owners are using to turn their properties into sources of income.
3 ways to make money from your home
A home is the biggest investment most people make, but many homeowners miss out on the potential income their homes can provide. Here are three strategies you can use to avoid missing out.
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1. Temporary employment
Platforms like Airbnb make it easy to list all kinds of homes — from full-fledged apartments in the suburbs to apartments in bustling cities to cabins in the woods — for short-term rentals. While some people buy homes to rent out on platforms like Airbnb, you can also list a spare room or basement. That way, you are still living in your home with a guest. You can even block off certain days at the rental property if you want more space to accommodate your family and other guests.
This strategy can work well for new empty nesters who want to stay in their current location but have plenty of empty space. However, check your local laws and consider installing safety features to stay safe.
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2. Get a home equity conversion mortgage (HECM)
Home Equity Conversion Mortgages (HECM) are a type of reverse mortgage that allow homeowners age 62 or older to convert their home equity into cash. Unlike a traditional mortgage – where you make monthly payments to pay off the loan – you repay the entire loan when you sell the home, die or no longer use the home as your primary residence.
HECMs are supported by the federal government, and you’ll need to meet with a US Housing and Urban Development counselor before you can move forward. There are various rules that you should review before getting a HECM, such as that you must keep the home in good condition.
A home equity line of credit (HELOC) is another way to tap into your home equity, although these are not designed specifically for older adults like HECMs.
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3. Build an accessory dwelling unit
Older adults with a larger budget may consider building an accessory living unit on their property. It’s a detached unit that can provide rental income (and can serve as guest accommodation or, in the future, a caretaker).
A serviced residence unit requires upfront investment, time and effort. But if you’d like to rent out your property without actually sharing the space with guests, it might be worth considering. This unit may also be suitable for long-term tenants, making monthly cash flow predictable.
