When you need extra money, most financial experts will advise you to squeeze some cash from the equity you have in assets. Typically that means looking at the biggest asset most people possess – their home. But what if you’re not in a position to sell or get a home equity loan?
Believe it or not, the value of your home isn’t limited to how much equity you have. Anyone with a spare room has access to a revenue stream that requires little effort to collect. By renting – either year-round or for nights here and there – you’ll start generating passive income almost immediately.
Here’s why you should consider it, and everything you need to know before starting.
Why It’s a Good Idea
If you have a spare bedroom you rarely use, renting it out part-time can yield hundreds or even thousands of dollars per month, especially if you happen to live in a desirable area or a prime location for when events come to town. Many landlords or subletters find that renting a room to strangers can easily cover their rent or mortgage.
That extra cash can be used to pay down debt, save for retirement or purchase a second property. A rental calculator from Airbnb shows that a one-bedroom in Lynchburg, VA would rent for about $750 a month or $9,000 a year. A few hundred dollars a month could provide an adequate safety net or increase your budget.
How to Create an Appealing Listing
Have your room stand out among other listings with these best practices:
- Decorate. No one wants to live in a room with bare walls and floors. Outfit the room with basics like a mirror and some framed posters. A decorated room will photograph better than a sparse one and could fetch more money in rental income.
- Furnish the room. Having a furnished space will allow you to charge more, since you’ll be able to accommodate vacationing people as well as folks looking for a longer stay. If they do have their own furniture, you can sweeten the offer by sharing a portion of your basement or shed as storage.
- Take good photos. Some services, like Airbnb, provide free photographers who will take professional-looking photos of your pad. For others, such as Craigslist, you’ll have to shoot your own. It might be worth hiring a professional photographer if you don’t have access to a decent camera – remember, these photos will be the main selling point for your listing, and photos are a one-time expense.
- Describe the surroundings. Every neighborhood has its own benefits, which you should mention during your listing. If you live in a quiet suburb, talk about how peaceful it is to sit on the patio after work. If you live in a bustling downtown loft, mention the activities available just a few blocks away. David Rae, CFP™ and President of DRM Wealth Management, rented out his extra bedroom for seven years and said he included which bars and restaurants were within walking distance, “which is a cool draw for people new to town.”
Best Sites to List Your Room
If you’re not sure where to start when it comes to listing your room, here are three popular options so you can find the right match:
- Facebook: Those worried about sharing their home with someone they barely know could consider listing their apartment or home on Facebook. Rae said this is how he found all of his roommates. “This way, everyone is at least a friend of a friend,” he says
- Craigslist: Craigslist is one of the most popular options for landlords, because it’s free to list and you can renew the listing anytime you want. With that said, it’s important to be aware of potential scams, so be aware as you search for a good tenant.
- Airbnb: Because landlords are allowed to rate renters on Airbnb, you’ll be able to see any reviews left behind from people they’ve already rented from. This rating system allows you to sort through potential tenants and determine the best fit – instead of finding out the hard way.
Have you listed a room for rent? What are your tips for those considering it as an additional revenue stream? Let us know in the comments below!
The post Make Money While Literally Sleeping: Rent a Room for Extra Cash appeared first on ZING Blog by Quicken Loans.
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