In one of the previous posts, we discussed 12 mortgage lifehacks to help you pay off your mortgage faster and pay less in interest. In one of those life hacks, we briefly talked about making your property work for you to make extra income that can be used to supplement your mortgage payments. In this post, we will discuss them in more detail.
In our list, we will focus primarily on more passive ways to make money from your property. We will also primarily discuss the options that require utilizing some part of your property. Thus, we will not go into too much detail about "start your online business" or "trade your time for money" types of opportunities for two reasons:
The online business does not depend as much on the type of property you have. You can put a table, computer, and chair on any property to start your online business.
Starting an online business requires a lot of time. We are thinking about an average person who already works 9-to-5 and also has to spend time with family. So, we are focusing on more passive types of investments where you are making returns on your real estate, not your time.
Here are a few such "start your online business" or "trade your time for money" opportunities to explain what we mean:
Start YouTube channel.
Translate, transcribe, or enter data online.
Sell items online.
Make jewelry or other crafts.
Start tutoring classes for kids.
Starting a blog, etc.
How to make money off your property?
There are 5 key factors that you have to think over before you pick an option from the below list:
The first step is to analyze your property to see its strengths and weaknesses. Remove the "owner and occupant" hat, and put on a more critical "property evaluator" hat. Examine your property from 3 angles:
Inside the house: the available space, think if any space can be cleaned, whether you can free any rooms or a place in the basement.
If you live in the house, go outside and evaluate your backyard. What can be done there?
The last angle is the location of your property. Is it located in the city core, outside of the city? Do many people rent places in your area? The options available to you would be depended on your location.
How much time can you dedicate to making money from your property?
How much money can you invest?
Do you want strangers on your property?
What skills and experience do you have that you can use?
A combination of the factors above will help you understand the "assets" you have, both related to your property and your skills and experience.
Ways to make money off your property
1. Turn one of the rooms or basement into a rental unit.
If you own a home with a basement, you may consider fixing it, renovating, and renting it out. This option does permanently lock your basement, but it also requires little work once the basement is ready and you find the renter. Also, renting the basement provides for a good passive stream of income that can sometimes cover half of your monthly mortgage payment. Depending on your property location, its size, and attractiveness, rents range from a few hundred dollars to more than $1,000 a month.
The key considerations for this option are:
Make sure the renters are nice, keen to have good rental history, and will not default on payments. The worst thing that may happen in rental is bad renters that don't pay on time. This sucks your time, nerves, and energy.
The other consideration is to increase the rental revenue as much as possible. To do so, make sure the basement looks nice and tidy, has the key amenities. If you plan to rent it out for many years, consider major renovations, like splitting the basement into rooms, buying new appliances, even making the basement windows larger. If the basement lacks a separate entrance, you may consider ways to break the wall to make one. All this will pay off in the long run with higher rental payments.
2. Rent your home out Airbnb style for short-term homestays.
With this option, instead of looking for a long-term tenant for your spare room or a basement, you would be renting for short-term homestays. While this option requires a bit more management to search renters as well as clean the place each time the renters leave, it pays better as you now become a sort of hotel manager. And, depending on the area and the city you are in, hotels will charge anywhere from $60 to $300 per night. Given there are people who prefer the cozy home-feeling place to stay, the Airbnb rentals can easily charge what the hotels in the area charge. To increase the attractiveness of your place, consider offering a bed-and-breakfast type of accommodation. Also, a parking spot can also help bring in the renters that like to drive around.
3. Rent your house out while you're on holiday or away on a business trip.
If you are a frequent traveler for business and live alone, or you go on vacation with your family a couple of times a year, you may consider renting your full place for the time you are away. This is not much different from the previous option, except that you would want to find a renter for the full time that you are away. You would charge a similar night rate that hotels around you would charge: depending on the city and location, anywhere from $60 to $300 per night.
4. Rent out your spare storage space.
Do you have an unused space in the basement or garage? You can rent that space for storing other people's stuff like bikes, old clothes, baby stuff.
Depending on your property location and its size, rents range from a few hundred dollars to more than $1,000 a year.
5. Rent your parking space
Lots of people have vehicles such as boats, RVs, and motorbikes that they want to protect from winter weather but have no space to keep at their homes. Some are looking for year-round storage options. Letting someone else store their vehicle in your garage, shed, or barn could bring in some handy monthly income.
With longer-term rental agreements, you would expect to get from a few hundred to a few thousand dollars a year from renting your parking spot.
If your property is located in a busy office area or near a train station where lots of people drop their cars to travel by subway, you can offer day/night parking. Depending on your property location, you may get around $10 or more per day.
6. Rent your home out for filming and photoshoots.
If your home is spacious enough, you may consider renting it for a few days for photoshoots or even filmmaking. Glamorous properties are obviously popular, but all sorts of quirky and original sets are needed in films, so it’s worth giving it a go. To start, you would need to register with the agencies that engage in filming and photoshoots.
Rental rates can vary from $500 to $5,000 a day, depending on the type of project (a feature film typically pays more than a TV production.
7. Grow and sell plants.
You can use your spare space at home for growing plants, herbs, or flowers. While you may think you need a backyard for growing them, the reality is that many exotic plants and flowers will only grow at home. For example, you may grow Areca Palm, English Ivy, Aloe Vera, Indian Basil, etc. You may need a state license to sell plants. Each state has different rules, so it's important to check your state's requirements. You can sell plants or plant products at an online store like Amazon. If you can manage your own website, that can be a viable option to sell indoor plants for money. Alternatively, you can sell these at your local marketplace. The returns will vary depending on the time you can invest, your skill, and available space.
8. Grow and sell oyster mushrooms in the basement.
If you have spare space in your basement, you can make money growing oyster mushrooms or other edible mushrooms there. There are many types of mushrooms that can be comfortably grown in the basement. Each type of mushroom will require a different type of growing material. Some mushrooms will grow on straw, others will grow on chunks of wood. You can sell your mushrooms to local marketplaces.
Ways to make money off your yard
If you have a backyard, you could explore one of the below ideas. Again, you would have to examine your backyard for available space, but also take into consideration its location, how much sun it gets, if it is easy to get water to it, how many sunny days it gets per year, etc.
1. Grow and sell backyard produce.
If you are good with growing plants and don't mind spending some time on weekends looking after your plants, removing weeds, watering your plants, this could be an option for you. You may also choose to build a greenhouse in your backyard to diversify into more types of produce.
2. Grow and sell trees or saplings.
Trees and saplings take longer to grow, take more space, but they are a lot of joy to grow. Growing trees for profit is an ideal part-time or full-time business for anyone who enjoys being outdoors and working with plants. Trees are a valuable and renewable resource that can be grown in a tiny backyard. The most profitable trees for most small growers are those in demand by buyers, are reasonably easy to grow, and bring above-average prices when sold. High-value trees are sold at retail prices to homeowners and landscapers, hobbyists who use the wood or tree shoots to make everything from baskets to guitar backs.
3. Grow and sell flowers.
Cut flowers are a perfect cash crop because they are easy to grow, produce quickly, and can supply a good income throughout the growing season. Also, startup costs are low, as most gardeners already have the basic gardening tools needed and only have to buy seeds to get started. Local farmer’s or Saturday markets are the best places for the beginning flower grower to get started.
4. Grow vegetable seedlings.
Similar to the above options, you would engage in growing plants but with a focus on seedlings.
5. Get into honey-making.
If your property is located outside of the city, is close to fields that have flowers, and you are not afraid of bees, honey-making could be the venture for you. You also need to make sure you are away from densely populated areas and heavy traffic. Keeping bees does require a bit of an upfront investment into hives, gear, and bees. Also, you would need to educate yourself about keeping bees healthy and happy.
6. Build a tiny rental house.
An alternative to renting a room in your house or your basement is building a tiny rental house in your backyard. Obviously, the size of the backyard is a big factor for this as you would need to build a big enough rental house as well as plan for passage to it. The laws in different countries and states have different rules regarding building rental houses on your property so you would need to check them. Also, building a rental house does require quite a lot of investment. However, with a free-standing structure, with its own entrance, you will be able to charge more for monthly rent than you would charge for a basement or a room in your house.
7. Turn your property into a private campground.
Obviously, not every piece of vacant land is well-suited to be a campsite. You’ll want to consider whether a camper would enjoy themselves on the property, if it’s safe, if it will cause issues with the neighbors, or if camping is even allowed under the local zoning.
Typically, any piece of land in a populated area will be tough to work with. Rural land that offers privacy is the best bet.
8. Grow city chickens or rabbits.
Again, suppose your property is located in a more rural area. In that case, your property is large enough, and you believe the neighbors are far enough to be disturbed, you may choose to make extra income growing chickens and rabbits. This venture will require an initial investment and quite some daily work, so it does not fit busy people.
In summary, there are quite a few ways to squeeze passive income from your property. You can then put that income towards your mortgage and pay it off faster. The options do have different levels of:
risks (both failing with your business and people-related risks if you rent to them),
need for extra education and trial-and-error.
In addition, your property, its size, and location will put barriers to the money-making options. However, the options provided in our post are by no means full. Your creativity and further research may help you identify another opportunity that fits your circumstances and wishes.