As we discussed last week, more and more potential new buyers are mistakenly finding home ownership to be too unaffordable. As home sale prices continue to rise, newcomers are being scared off from saving for their down payment. However, with real estate being one of the best investment options available, locking a home in at its current rate can yield great returns. Let’s take a look at a few more of the ways that homeownership could help your pockets.
House Hacking and Airbnb
You don’t have to bear the burden of your mortgage rate on your own, and your home can even be used to make you additional income! There are often going to be spare and empty bedrooms in a young homeowner’s house, and if that’s the case for you, put those rooms to good use and try house hacking. Any extra bedrooms in your home can be rented to kind people in your area. This can typically be for a fraction of the cost of apartments in your area, which offers your tenant a more affordable living situation, and offers you a few extra bucks in your pocket each month! House hacking in this way often frees up a homeowner’s finances to focus on maintaining the property as your tenants pay or contribute to the mortgage.
Another more flexible option outside of house hacking is to prepare spare bedrooms in your home for Airbnb. Airbnb is an online marketplace for lodging and vacation rentals. You can list your spare rooms, guest houses, and basement areas on the website as available stays to your guests. In exchange for a cozy bed to sleep in for the span of their stay, guests will pay fees similar to that of a hotel. Getting a daily payment for the room can add up, and unlike having a renter, you’re not tied to one tenant for a long period of time. You can quickly and easily choose which days your room is available, so next time your in-laws pop by, you’ll have an available guest room for them. So, instead of allowing spare rooms in your home to collect dust, collect some income from tenants and guests.
One other way that home ownership could help you financially is in retirement. With pensions being nearly history, social security benefits on the rocks, and confusion over how to run one’s 401k; retirement seems uncertain for many young people. It’s hard to prepare a logical budget for a time we know nothing about. But one thing we have always known is that a rent or mortgage payment can account for the majority of one’s spending. Paying off a home, maybe by paying down a mortgage or downsizing, can free up a lot of money. Having a place to sleep at night that you don’t have to worry about paying big bills for can make retirement a less stressful and more financially fruitful time! The sooner you start on your mortgage or equity gains, the more likely you are to reap those benefits later in life.
In Orange County, currently homes average a price of $1.39M according to data supplied by the MRMLS/SCMLS. That’s not exactly cheap; entering that kind of deal can be both difficult and scary for first time buyers. But with benefits like the option for house hacking income and retirement security, who wouldn’t want to be a homeowner?