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When income streams begin to dwindle in retirement, it can feel tricky to adjust to living on less. However, if you own a home, you might have your finger on the pulse of an unexpected stream of income possibilities that you’ve never considered before.
Not only do you potentially have equity to tap, but you have physical spaces that can be used for a variety of income-producing purposes.
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Finance and real estate experts explain some ways to make money off your home in retirement.
Earning passive income doesn’t need to be difficult. You can start this week.
Rent Out a Room or Space
One of the more obvious choices (though perhaps you’ve never considered it) is to rent out a spare room or any other unused spaces in your house on short-term rental sites, according to Daniel Cabrera, a real estate investor and owner and founder of Sell My House Fast San Antonio Texas.
“Even renting a single room a few nights a month could provide $500 to $1,000 in extra annual income. For example, I worked with a retired couple who earned an extra $3,000 per month renting their in-law suite,” he said.
Learn More: 4 Ways the Middle Class Can Make an Extra $500 a Week From Home
Invest Funds From a Home Equity Line of Credit (HELOC) or Loan
If you’ve earned equity in your home, you’re essentially sitting on untapped money that you could be using to earn more money.
Cabrera pointed out that if you can borrow from your home through a HELOC or other kind of home equity loan at a low enough interest rate, you can invest it elsewhere for higher returns.
“I know a retiree who borrowed $50,000 against their home, invested it and now earns $3,000 per year in interest, enough to cover the loan payments and supplement their income. Their home appreciation covers any interest paid,” he said.
Downsize and Sell
Another option is to sell your existing home, particularly if you have a good amount of equity, and downsize to an affordable property to tap that equity, Cabrera explained.
“I helped a client sell their large house for $200,000, buy a smaller condo for $150,000 and invest the $50,000 difference. Now they earn $3,500 annually from that investment, covering condo costs and providing extra income in retirement,” Cabrera said.
Convert Space
Another money making possibility involves converting space in your home, according to Holly Andrews, a financial expert and director of KIS Finance.
“Your garage or parking space can earn you money with little effort,” she said. “In my opinion, turning unused rooms into creative spaces is an underrated move.”
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For example, she suggested that if you’re good at a creative art such as painting or woodworking, you could convert a room in your house into a studio and sell your creations. Not only can this bring in money for your household, she said, but it can also keep you engaged in your hobbies without investing almost any money.
“It’s also more stress-free, especially compared to renting a room,” she said.
She shared how her neighbor turned her garage into a pottery studio and started selling her pieces at local markets. “Now, she … is doing fantastic financially by working less than before and doing something that is her true passion,” she said.
If your home is large, think about converting some space into a separate apartment, Andrews said. “Divide your house into a 60-40 split, making a smaller rental unit with its own entrance in the process. For this, you’ll need some initial investment but can be more appealing than just renting out a room as it keeps your living space private.”
Vacation Rental
In the right markets, it can still be very lucrative to use platforms like Airbnb and Vrbo for vacation rental income, said Justin Godur, a finance advisor and real estate expert and the founder of Capital Max.
“For those with a spacious backyard, consider renting it out for events or as storage space for boats and RVs,” he added.
Gig Economy Opportunities
Additionally, Godur suggested that the thriving gig economy offers lots of ways to utilize your home for earning income.
“Renting out parts of your home as a workspace for remote workers or freelancers can be highly profitable. You might also explore using your home to host workshops or classes, capitalizing on any skills or hobbies you possess. Moreover, if you have a knack for hospitality, running a small bed and breakfast could be both enjoyable and lucrative. The personal touch of a well-managed B&B can attract a steady stream of guests,” Godur said.
“These strategies not only provide financial benefits but also offer opportunities for social interaction and personal fulfillment. With careful planning and a bit of creativity, your home can become a cornerstone of your retirement income,” Godur said.
If you’re open to a little out-of-the-box thinking and careful planning, your home could be a gold mine of income in the years when yours is limited.
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This article originally appeared on GOBankingRates.com: 6 Ways To Make Money Off Your Home in Retirement
