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Your home is your castle, so they say. It’s probably the single biggest investment that most people shell out money for. And when you’re finally done paying its last mortgage, a big chunk of your net worth is often tied to the value of your residential property.
Determining whether your house is an asset or a liability could be quite tricky. When you’re talking about your net worth, then your fully paid house is certainly an asset. If you’re not yet done paying for your home’s mortgage, then your house is considered a liability. That’s because you’re not exactly generating money from your house. And if it doesn’t generate any cash flow, then your house becomes a liability because there are expenses needed to maintain it.
If you want to turn your house into an asset, then you need to generate income from your property so that you’ll have a net positive cash flow. One way to do this is to turn your house into an income-generating property. There are several ways to do this.
Earn rental income
By renting out your house or a portion of your own home, you could generate income that could take care of the monthly mortgage and other expenses for its maintenance and upkeep. If you have a basement or a spare room that is no longer being used, you might want to have them rented out. Although certain areas of your house might need to be refurbished and remodeled, such as creating a separate entrance for prospective tenants and adding another toilet and bath, the rental income that you get could pay for the house itself in the long run. You also get to have some peace of mind, especially if you plan to be elsewhere for an extended period of time since someone would be there to look after your property.
Borrow on equity
If you want to acquire another income-generating asset, you could use your house as collateral to borrow some much-needed funds to finance your acquisition of another asset. Don’t ever use your home as collateral if you need to borrow money to finance your travel whims or other items that are deemed as liabilities. Doing so would only make matters worse.
Start a business from home or work from home
Almost everyone knows how today’s multi-billion dollar tech firms like Apple and Hewlett Packard started – from the garage. If your garage is no longer being utilized, you might want to use that area instead either as a business incubator or a home office by adding a few office chairs and some desks to create your own workstation. Although this doesn’t necessarily generate income during the first few months – or even years – it nonetheless saves you money that you would otherwise use for office rentals. You could factor in your office rental into your operating expenses so that you could come up with the appropriate price point for your product or services. Another way is by actually paying yourself the office rental expenses so that money actually goes into your pockets. A home office doesn’t necessarily have to be tech-related. You could launch a food business from your own home and use your kitchen instead, or perhaps convert an unoccupied bedroom or an attic into an art studio where you could conduct workshops.
Grow your own food
If you’re lucky enough to have a big backyard, you could convert that into a garden and sell the produce to others. This not only saves you money on groceries but generates additional income for you and your family. Depending on where you live and how big your backyard is, you could even venture into other areas such as setting up a mini poultry farm, raising several pigs, or even cultivating flowers. You could sell eggs, meat, and flowers not just in your neighborhood but to other vendors as well.
Start a yard sale
If your house is big enough to have an open space in front of it, you might want to consider putting up a yard sale on a weekly basis. And if that front lawn of yours is quite big, you could even put up some stalls and invite others to rent them so they could sell their stuff. You could also come up with a themed bazaar every weekend so you could attract all sorts of prospective customers who might be interested in an array of stuff.
There are a ton of ideas out there if you want to turn your house into an income-generating property. Rather than pay for your home’s mortgage, use your house as an income-generating tool that will pay for the property itself.
Source: Financial Freedom Inspiration