If you have debt, have you been thinking about how you make some extra money or reduce your living expenses so you can pay off your debt faster? One thing you might consider doing is getting a roommate or renting your home in order to generate extra income.
I invited my brother to be my roommate last summer and it has been a game-changer for my monthly budget. It helps with my house payment and utilities, allowing me to put more money toward paying off debt and building my emergency fund.
But before you move forward with this idea, keep in mind there are some pros and cons of renting your home to make extra money. Here are a few things to consider before deciding if you should rent your home to make extra money.
Pros of Renting Your Home:
1. Extra Income
Renting your home could provide you with a steady stream of income to help you get debt paid off. If your property is near a college campus or if the number of available rentals in your town is lower than the demand, you may be able to rent your house, or a room in your house, for quite a bit of money. Applying that money directly toward your debt can be a big help.
2. Property Value Increase
Generally, when you are a property owner, the value of your home should increase over time. This is due partly to inflation. In addition, if you make renovations in the home or add onto it in size, it could further raise the value of your home. Increasing the value of your home will help if you decide to sell the property or if your turn it into a rental property instead of your primary residence. Generally, the more bedrooms a home has, the more rental income it will generate.
3. Tax Benefits
There are some tax deductions you can use as a landlord. For example, you may be able to deduct repairs, depreciation, and the interest you pay on the mortgage.
Cons of Renting Your Home:
In theory, gaining extra income from renting your home sounds like a great idea. However, what happens if you can’t get anyone to rent your home? It may not be a huge problem if it’s your primary residence, but if you own another property that you actually live in, you now have more than one mortgage to pay and may not have the income to do it.
Any repairs that need to be done to the home are your responsibility as the owner. Of course, this is the case with any home you own. But, if you live there yourself, you know how you will treat the property. On the other hand, if you have a renter that is irresponsible or damages your property, the costs for fixing things could exceed the amount of money you gain renting it. This is going to eat away at your property value and the rental income you hope to gain.
3. Could Tie You Down
When you rent out your home, or a portion of your home, you may not be able to just take a job in another city and move. If you do, you might end up paying for two properties for a while, or breaking a lease with a long-term tenant so you can sell the property and move. It could also be harder to travel because you need to be available for emergencies and collecting rent.
Earning extra money is always a great way to get your debt paid off faster. Just keep in mind there are pros and cons of renting your home to make extra money.
Have you ever thought about getting a roommate or renting your home for extra money?
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