Posted November 09, 2021
By Zach Scheidt
3 Ways to Use Your Home for Extra Income
It's Income Week here at Rich Retirement Letter.
And my team and I are excited about all the income opportunities we've been researching!
Our goal is to help you lock down the cash flow you need to cover your day-to-day expenses and help you go well beyond your normal daily needs.
After all, true wealth leaves you with the time and resources so you can focus on the things that really matter in life.
Later this week, I've got some reliable ways that you can capture income from some of Wall Street's greatest companies — using some of the same strategies that I learned during my hedge fund career.
But before we get to those ideas from Wall Street, I want to share some of my favorite off-market income ideas that you may want to tap into right away!
Today, we're going to talk about your home and three ways to turn that valuable asset into your very own cash-flow stream.
Income Streams From Your Home Equity
Inflation is becoming a big challenge for the economy (and especially for those who worked hard to set aside savings.) The cash you saved was supposed to last and generate enough income for you to live off of.
But as inflation eats away at the value of your savings, you may need extra income to help you keep up with higher prices.
If you're a homeowner, there's one very important way that inflation is helping to build your wealth.
Home prices have been moving sharply higher thanks to a shortage of homes available and strong demand from families across the country.
There are several ways you can turn the asset of your home into a stream of income or even a lump sum of cash in the bank!
Home Income Stream #1: Cash-Out Refinance
First, you might want to consider a cash-out refinance.
With this option, you could take a new mortgage and get immediate cash from the value of your home.
Yes, I know this may sound backward, especially if you've paid off all the debt on your home.
But in today's high-inflation environment, the rising value of your home (and the investment income you can generate from the cash you pull out) can more than offset the interest you'll pay on your mortgage.
Given today's exceptionally low interest rates, this option is at least worth considering as a way to help grow your income.
Home Income Stream #2: Reverse Mortgage
Second, you could consider a reverse mortgage.
With a reverse mortgage, you can have monthly income sent to you. The payments will then be added to a loan (or reverse mortgage) against your house.
This income option is often mischaracterized and misunderstood by homeowners.
When you have a reverse mortgage, the company cannot take your home away. And you won't have to pay the cash back.
The mortgage company only receives their cash back when the house is sold.
And with home prices rising due to inflation and interest rates low, this option can be a particularly good way of capturing some extra income.
Home Income Stream #3: Rental Income
One final way to use your home for extra income is to rent out a room with a service like Airbnb.
My parents are empty nesters, but still want to keep their large home for when our big family gets together.
I'm thankful that they do because we make some great memories during holidays or when we get together for a Friday evening or summer afternoon.
Still, I know the house has expenses and my parents are on a fixed income.
A few years ago they started listing their home on Airbnb.
They don't live in a touristy area, but they've still been able to make a good bit of extra income just from people who come into town to see relatives or for work.
These days whenever I'm at their house, they always have a story about a recent guest.
A lady with a relative in a nearby hospital... a father in town to see his long-lost son... or a group of bridesmaids in town for a wedding.
I get the feeling my parents would enjoy hosting even if they weren't paid.
But I also know they enjoy having the extra funds to travel around the country visiting my out-of-town siblings and enjoying some sightseeing.
All three of these income streams have both advantages and drawbacks.
But with home prices continuing to rise and demand set to rise for years to come, tapping into your home for income holds a lot of appeal in today's market!
My team and I have a whole week of income ideas ahead for you.
So if one or two don't fit your life right now, please stay tuned! I'm sure that throughout this Income Week we'll uncover some great sources of income that work for you.
Here's to living a Rich Retirement,
Editor, Rich Retirement Letter