By Alisa Aragon-Lloyd, as seen in "New Home + Condo Guide" magazine, November 12, 2022
Purchasing a home is a big investment, but remember, it IS an investment. If you purchase a property strategically, it can help you generate income, save on taxes and increase the value of your assets.
If you have extra space in a spare bedroom, garage, or basement that you are already heating, paying taxes and making mortgage payments on, why not earn some extra money? There is a positive side to becoming self-sufficient through making money with the assets you already have. With increased day-to-day costs, there is a financial advantage to keeping your overhead costs low by having a home-based source of income.
It’s always a good idea to check first with your local bylaws and ensure that you know about licenses, fees, and other requirements. Also, don’t forget to report your earnings on your income tax return.
The following are some ways to bring in extra income:
Use your home for a business
Not only does this save you the cost of renting a separate location for your business, it creates tax deductions for the portion of your home that you use for work. Even if you don’t have your own business, you may be able to telecommute with your current employer.
Rent out a portion of your home
When buying, look for properties with basement suites or mother-in-law suites. If you are willing to share living space and extra bathrooms, you could use the spare bedroom for a home stay or get a roommate. This can create substantial monthly revenue, which can reduce or cover your mortgage payments.
Rent out storage or parking
If your garage or basement is usually empty, rent them out for storage space. Similarly, if your condo comes with a parking space you never use, rent it out. Be sure to check condo regulations first and have a contract so you are not liable for damage.
Rent to vacationers
If you travel for months at a time, offer your home as a vacation rental. This also works if you have a second, often-unoccupied property in a desirable location. Make sure you have a contract that covers any potential risks.
Throw party sales
Some homes are just natural gathering places. You can host a party sale, such as Tupperware, Mary Kay, or anything that interests you (e.g., lingerie, essential oils, bath and body products, health and weight management products). If you are not interested in being a salesperson, independent distributors may be willing to part with a share of their profits or pay to use your home instead of theirs.
Boarding place for dogs and cats
Are you an animal lover? Many pet owners would rather board their pets in a private home rather than a commercial kennel. Make sure you follow all bylaws and necessary requirements.
Ready for Hollywood?
Your home might have star potential. There are residential property scouts that search for properties for films, TV shows, and commercials. You can also register your property in a film location. Scouts will prepare a digital casting call from properties and match the director’s needs. Make sure that you are fully aware of what changes or modifications they will do to your property and that all repairs are completed as a result of the set designer’s damage.
When you purchase a revenue property, you generate substantial tax deductions for mortgage interest, closing costs, property taxes and ongoing maintenance.
Leverage your equity
If you have substantial equity in your home, you have access to an affordable source of funding for other revenue-generating opportunities, like investments, starting your own business, or upgrading your education.
Speak with a professional mortgage expert on how to create wealth through real estate. They will help you explore your options and determine the best plan of action.