Many financial experts have been saying for years that your home is not an asset. As long as it is not making money for you, it will be considered a liability. But there’s also a way to make your home make money for you. It’s not like it will continue to be a liability well into your retirement. If you have a real estate property to your name, it’s best to think of ways on how you can make it convert money.
Although real estate is an excellent source of passive income, it cannot be a source unless it starts making actual profits. If it’s just named after you and it sits there being pretty, that’s not an asset. That’s a liability for which you have to pay maintenance and real estate taxes. Not to mention, you have to fix the property to ensure that it’s structurally sound from time to time. But the good thing about real estate is that it appreciates. It can generate income once property owners realize how to make a profit from it.
So, really, how can you make your home make money for you? Aside from the usual side jobs of selling stuff online and working as an online marketing specialist, how else can your home be a source of money for your family? How can it be an asset instead of a liability?
Residential Rental Property
You can convert it into a rental property. It’s straightforward. All you have to do is find space in your home to convert into an extra room (that is if you don’t already have an extra bedroom to spare). If you live near a tourist spot, you should know that there are a lot of backpackers looking for a cheap room to rent. The most common way to extend the livable space in your house is to convert the garage. Replace the garage door with something more soundproof and weatherproof to protect anyone who will sleep in that converted room.
You can offer this either for short- or long-term. What’s important when renting property is that you can have a return on investment (ROI) in as short as 18 months, depending on your location. It has always been a great investment to turn a portion of your home into a rental property but admittedly, the process might be difficult because you need to consider zoning regulations and homeowners’ association rules.
Buy and Hold
Another popular way to make money off real estate is to buy a property and hold it until the value increases. If the property you bought already has a house, then rent it out or use a unit of it while renting the other one. Ideally, you shouldn’t have to get from your own pocket to pay the mortgage. Make sure that the rental of the property can cover the mortgage.
After a few months or years, when the value of the property increases, you can then put it on the market. You can look for a real estate agent who can represent the property well and sell it for your desired price. However, always take note of the market movements so you don’t short-sell yourself.
Flipping
This method is not for everyone else because flipping homes is a lot of work. Basically, you’re going to buy a property that is so dilapidated that the seller will thank you for taking it off their hands. The basic nature of flipping homes is in your ability to renovate and remodel the home yourself. If you can do that by yourself, then you will generate a ton of income from this strategy. At the very least, you need to know how to oversee a crew and have a sense of the property’s underlying value post-renovation.
Commercial Property
Probably the most popular way to earn from a real estate property is to own a commercial property. There is no better way to generate income from real estate than to rent out a commercial unit. The good thing about renting out commercial buildings is that the cost of the upkeep is lower than residential apartments, while the cost of renting it is higher than average. If your property is in the commercial area of the town or city, rest assured that it generates more income than you can imagine.
Don’t think of your home as a liability. There are plenty of opportunities to earn from it as long as you are willing to adjust your standard of living and lifestyle. Real estate remains to be a safe investment despite the movements in the market lately.