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7. Add a Basement or Garage Apartment
You know what most people use their basements and garages for? Storing Christmas decorations and boxes of old junk — which is about as useful as a screen door on a submarine.
Instead, convert your basement or garage to an income suite. To be practical, the rental unit should have its own separate entrance, and you’ll need to add a kitchen (or kitchenette) and full bathroom if it doesn’t have them. If it cost you $6,000 to set up a basement apartment, and you rent it for $600 per month, it would pay for itself in just ten months.
The basement should ideally have climate control, but if not don’t sweat it. Most basements are inherently cooler than the rest of the house, and for the winter, you can always provide a space heater if need be.
Keep in mind that your garage may not be insulated, and should ideally have some form of climate control. Space heaters or pellet stoves are an option for heat. But unlike basements, which remain cool both from being underground and being the lowest point in the house, garages may also need cooling. Window units are an option however, to avoid adding ductwork.
In most cases, you can set up the apartment informally, without rezoning the property for a second unit or possibly even pulling work permits. But do your own homework on that front, and don’t blame me if your municipality gives you grief.
Price out how much it costs to create a basement ADU or garage apartment, just for gits and shiggles. Just make sure the local market rents and demand justify the expense, before you go through the hassle of creating a separate basement apartment.
8. Add a Standalone ADU
If your house doesn’t have a basement or garage that lends itself to converting into an apartment, you could alternatively build a standalone ADU.
Accessory dwelling units go by many names: casita, guest house, carriage house, in-law suite. You can even buy a tiny home cabin kit on Amazon for under $10,000, and build it yourself in eight hours!
Sort of. Those basic kits don’t come with electricity, running water, kitchens, bathrooms, or climate control. That doesn’t exactly fit the definition of “habitable.”
Still, you see the possibilities: if you could build a freestanding ADU for $20,000 and rent it for $1,000 a month, the project could pay for itself in under two years. Which says nothing of the additional resale value.
You can also rent out guest houses on Airbnb listed as “entire home,” if you don’t want to rent long-term to tenants. I’ve stayed in guest houses on Airbnb before, and for that matter in above-garage apartments. All positive experiences.
And, of course, if your aging parents ever need to come live with you, at least you can put them under a separate roof.
9. Move into the ADU, Rent Out the Main House
Not all of us feel compelled to live in McMansions. Some of us are perfectly content to live in a small house or apartment, or even a tiny home.
If you don’t mind less square footage, consider moving into the accessory dwelling unit and renting out the primary residence. That could be to long-term renters or to short-term guests on Airbnb. Or, for that matter, to extended stay guests such as travel nurses.
You can earn far more rental income, potentially covering more of your monthly expenses than just your housing payment.
10. Rent Out Storage Space
Boxes and storage bins don’t play music late at night or leave dirty dishes in the sink.
Our co-founder Deni rented out most of her detached garage at her former home. Someone paid her $300 a month to store their stuff there, and Deni never saw them. They had a key to the garage (but not her home), and came and went as they pleased – which was almost never.
Before you get too excited, bear in mind that this tactic is the least lucrative on this list, and will almost certainly not cover the majority of your housing payment.
Another advantage to renting out storage space: if renters don’t pay the rent, you can “evict” their stuff quickly and inexpensively. It’s nothing like the long, drawn out eviction process for residential renters.
Check out Neighbor.com and SpareFoot.com as two options for renting out your spare storage space, and enjoy some stress-free income!
11. Rent Parking
In some neighborhoods, parking comes at a premium. If you have a space you don’t need, convert it to passive income!
Think bigger than just cars, too. Could you rent parking spaces for RVs? Boats? Other oversize vehicles?
The revenue probably won’t cover your monthly mortgage payment, but it can at least put a dent in it.
12. Rent an RV Hookup
For that matter, you could let RVers park on your property as an overnight destination. If your property fits that bill, consider installing an electric, water, and sewer hookup.
You don’t have to share a roof with your guests, and you still collect some extra income. Again, it probably won’t cover your entire housing expenses, but it helps.
13. Foreign Exchange Students
When Deni first started this business with me, she was a bit cash-strapped after our startup costs. Her children had all moved out of her suburban home, leaving her with a large home with an equally large mortgage payment.
But she and her husband Jerry weren’t ready to downsize just yet, and they love kids, so they got creative. After a little research, they discovered an exchange student placement program that pays a generous monthly stipend to hosts.
They soon welcomed Alex, a teenager from China on an exchange. While they only planned to host Alex for a single school year, they fell in love with him and offered to let him return the following year.
He’s now going into his third school year living with Deni and Jerry. And all the while, the placement service pays over half of Deni and Jerry’s mortgage!
Nor is this option limited to homeowners. It’s a great option for rent hacking as well.
Deni went through the Cambridge HomeStay program if you’re interested in checking them out.
14. Get a Job That Offers Free Housing
Last but not least, you could always get a job that provides housing. Katie and I do this currently: the school where she works pays for our furnished apartment.
It’s standard practice in international education, where teachers and administrators live for free. But plenty of other jobs provide free housing as well, including:
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- Groundskeeper/caretaker
- Live-in caregiver
- Au pair
- Travel nurse
- Park ranger
- After-hours security
- Property manager/superintendent
- Diplomat/Foreign Service officer
…and many others. While it’s a type of house hacking largely outside the scope of this article, it’s worth mentioning nonetheless.
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