I read an interesting piece about a way to find “hidden income” in your home in the Wall Street Journal about a month ago, and it has been on my mind since. The article described how websites like Airbnb are making it easier to rent out a room, guesthouse, or basement for a temporary length of time. For San Diegans, due to the fantastic tourism industry and the strong rental market, this idea holds a lot of potential.
Consider looking for “hidden income” in potential purchase properties
Finding “hidden income” by renting space could be a game-changer for homeowners who are struggling to make their mortgage payments or who just need a little extra income. Many times, these websites cater to short-term stays, such as a weekend or two-week stay, so it is not a major commitment and could be adjusted to fit your lifestyle. I have been thinking about it as an intriguing option for some buyers, who may be able to stretch their purchase budget for a home with more room than they need and actually come out on top if they take advantage of that space by renting it out.
Calculate the potential “hidden income”
There is a helpful sample calculation in the WSJ article linked above. I won’t take the time to go through all the calculations here, but basically the sample shows that you may be able to purchase a larger home and still save $100 a month after covering the additional cost of the mortgage. That $100 would make you $6,000 over 5 years, or could be put toward the mortgage to help pay it off ahead of schedule.
My strategies for buyers
I have always considered it important to help my clients find the best use of their money in addition to finding the home they want to be in. For some this has meant buying investment properties to live in for a few years before buying the home of their dreams. For some it has meant investing in rental properties as a way to secure additional retirement income. I plan to encourage clients open to the idea of renting out extra space to consider this option as well, since it may broaden options and be a smart financial decision.