Make Your Home Pay You Back
Average house price in 2009 increased a small amount, but over all they’ve dropped 15 to 30% across the nation since the recession started. If you’re a homeowner watching your equity decline, it may be frustrating to figure out how to make this investment pay you back. There are ways to squeeze more money from this investment, until the market changes and you can sell with a gain outright. Here are a few strategies to consider if you’re holding on to an asset that feels like an anchor more than a life jacket.
Rent It Out
Whether you rent out the room or the entire house, there are some benefits to doing so. You gain instant residual income off a depreciating asset. You might even want to continue living there and rent out just one or two rooms, and live rent-free. This way, you offset your living costs based on the mortgage that you hold. In a sense, it’s paying you to live there instead of you paying to hold the mortgage. In some markets, the rental income won’t suffice to cover the mortgage, due to depreciation, but you won’t have to mow the lawn or clear the gutters, and do other types of maintenance that cost you money either. Renting a home usually implies that the renter will do these types of maintenance activities, and you can even spell it out in the rental contract.
This option is also great if you live in a tourist area, and just want to rent it out on peak tourist season. It can even be done if somehow your city ends up being the site of the next major Olympics. Anytime there is an event that draws numerous people to your city, it’s a perfect time to capitalize on that interest by charging a good fee to rent out your home for that time. Then, you can go elsewhere and avoid the crowds and noise completely, while making money to boot.
Convert It To An Urban Homestead
If you have a green thumb and a backyard, agriculture will be big business in the future. Set up an organic urban homestead and save money on your groceries. If you get good enough at it, you can sell your produce to your neighbors or at a local farmer’s market. The Dervaes family made their little home in California pay them back by using it to feed themselves and to sell organic produce to local restaurants. Their story and tips are on www.urbanhomestead.org. Just be warned, homesteading is addicting and there’s always something fun to learn.
Use It For Your Home Business
With the job market completely insecure, now may be the best time to start a home business. If you devote a part of your home to that business and it meets the federal guidelines for a home office, part of your mortgage and some utility expenses can be deducted from your taxes at year’s end. Check with an accountant first to make sure you qualify, as this is also a trigger for an audit, if not done properly. However, if you do use the space the way it is described in the tax codes, there’s no reason not to take the deduction if you qualify honestly.
This entry was posted on Friday, September 4th, 2009 at 9:58 am and is filed under Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
