In September 1998, Susan Wojcicki rented out her garage to help defray mortgage payments. Two students from nearby Stanford University paid $1,700 per month to use it as an office for their start-up, which was developing a new kind of Internet search engine. You guessed it: Google was born in that Menlo Park, Calif., garage. Wojcicki—a Harvard grad with an M.B.A.—eventually became employee No. 16. She is now CEO of YouTube and has leveraged her garage (and other talents) to build an estimated net worth of $10 million.
Even if you don’t have any genius-geek friends looking for garage space where they can change the world, you can still cash in on your biggest physical asset—your house—in innovative ways. Here are some options.
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If you’re in a big city, especially one with parking problems, you can rent out your garage or driveway to neighbors with cars. The website JustPark can help you set the price and find customers. Better yet, if you have a nice home in a sought-after location—and ideally an empty nest—you can rent out a room to someone who needs one.
There’s nothing new about the idea of taking in a boarder, but a host of niche websites simplify the process of finding customers. That’s the idea behind Airbnb, and a benefit as well of sites such as HomeAway and VRBO, which focus mostly on renting second homes. Another site, BedandBreakfast.com, allows you to advertise your place as a full-fledged inn, provided you’re prepared to serve breakfast and make the beds. The sites help schedule bookings, process payments (including taxes), and arrange for property-damage insurance in case of problems.
Aside from an attractive, clean home—and a nightly rate well below the rates local hotels charge—it helps to live near the water, ski slopes, fall foliage, an annual music festival, or some other attraction. For Mary Russell of Highland Falls, N.Y., the pull is West Point, and she regularly rents to Army cadets’ parents for graduation weekend and other school events. “It’s great because they don’t feel like strangers,” she said. “We’re serving a niche clientele, and I feel totally comfortable with them in my home.” Russell charges $175 per night—bringing in about $12,000 a year—and she has a second kitchen, so her family can stay upstairs when the main floor is rented out.
Of course, you need to be very careful about to whom you hand your keys. There are other risks as well. Before you open your door to strangers, consider whether you could be breaking local zoning laws, need a business license, or must collect sales tax and possibly even hotel-occupancy tax. You may also need business insurance to cover your liability in case someone slips while showering in your claw-foot bathtub.
Consult your attorney, insurance agent, and local zoning office if your rentals are more a full-time business than a hobby, says Christine Reuther, a lawyer in Radnor, Pa. It may not matter how often you rent it out. “If you’re advertising your home on one of these websites, it’s probably a business,” she said. That means you need to check local laws, become licensed, collect and pay the proper taxes, and buy a business insurance policy. Otherwise, renting could cost you far more than it brings in.
You can also monetize your property by using it to generate solar or wind power. “Most people think of wind power as these farms of 50 to 100 turbines,” Lisa Daniels, executive director of the advocacy group Windustry, said. Indeed, if you’re lucky enough to have acres of high, clear, windy land that’s near high-voltage transmission lines, you could earn hundreds of thousands from a wind-power company. But today’s technology also allows for small-scale projects that could power your house and perhaps help supply the neighborhood.
Here’s how: A wind company installs a single turbine on a metal pole, perhaps 100 feet up to clear trees and buildings. You stay connected to the grid and draw power from the utility when you need more than the turbine can supply. But when the wind is up, the mill can power all of your electrical needs—and even pump extra voltage onto the electrical grid, spinning your meter backward, so you get credit for the contribution.
With a wind lease from a company such as United Wind, there’s no up-front cost, but you’ll wind up with two monthly electric payments—one greatly reduced bill from the utility, thanks to lower usage, and another from the wind-power company, for what you draw from the turbine, at a below-market-rate price. The bottom line, Daniels says, is about a 10 percent savings, which in a high-electrical-cost area could mean $300 per year.
Solar companies offer similar leasing arrangements, without the windmill that some towns don’t allow—and some neighbors don’t like. An array of photovoltaic panels on the roof costs nothing up front and could produce $20 to $30 per month in savings.
For solar leasing, there are many companies now in the residential business, which means lots of competition. “Make sure to get multiple bids,” Galen Barbose, an engineer at Lawrence Berkeley, said. “And tell each company that you are, so they have a reason to give you the best possible deal.” You don’t need to be in the Sun Belt to make that work, but living in a state with high electrical costs (such as Alaska, California, and almost anywhere in the Northeast Corridor) makes the payback more significant.
Your home can boost your finances, too, by slashing your expenses for vacations or household chores—which actually can help your bottom line more than earning cash, since there’s usually no tax or insurance cost associated with barter arrangements.
You can, for example, swap homes with another family for your next vacation. So instead of staying in a hotel in Barcelona, let’s say you stay in someone’s home there. In exchange, that homeowner comes to stay in your home, usually at the same time.
For a nominal membership fee, sites such as HomeLink USA, HomeExchange.com, and Love Home Swap allow you to post photos and descriptions of your home, and search other listings. Obviously, it helps to be in a vacation-destination area, such as a major city or coastal community. Like online dating, the better you make your place look and read, the more attention you’re going to get. Also like online dating, you need to be careful. Some sites verify participants’ identities, so you can then Google their names to find out about them. The services also include user ratings for people who’ve swapped before. The owner of HomeLink USA, Katie Costabel, recommends meeting in person at one of the locations at the start of the vacation to exchange keys and recruiting a friend to keep an eye on things while you’re gone.
“Swapping tends to be a safer arrangement than renting because you’re also staying in their house at the same time,” Harlan Platt, Ph.D., a Northeastern University finance professor who studies risk, said. “Both parties have something to lose.” Also, because no money changes hands, there are no worries about sales or lodging taxes—and in most cases, no need to buy any extra insurance beyond your existing homeowners, umbrella, and car policies. (You can include your car in the swap or not.) “But you should always contact your insurer beforehand to let them know what you’re doing—whether it’s a swap or a short-term rental,” eanne Salvatore of the Insurance Information Institute, a trade association, said. “Make sure you’re covered in the event of a problem.”
Another spin on home bartering involves bringing someone in to live with you in exchange for services instead of rent. This is a small but growing trend for empty nesters, divorced people, and seniors with extra space and laundry lists of chores to keep up with, says Kirby Dunn of HomeShare Vermont, a group that helps make matches.
“You can have a younger person come live with you in exchange for mowing the lawn, shoveling snow, and raking leaves,” she said. Other arrangements include grocery shopping, cooking, housekeeping, and pet care. But neither nursing care nor major home construction projects are good for home-share arrangements, Dunn says, because those are best left to paid professionals. On the other hand, it’s nice to have someone around in case of a medical or household emergency.
“This is very different than a roommate situation because it’s not a pairing of equals,” Dunn said. “It’s your house, and you’re allowing this person to live under your roof in exchange for services.” You should check references, meet the person many times to ensure a good fit, create a document outlining the parameters of the deal (there’s a sample in the free guidebook at homesharevermont.org), and establish the procedure to follow when one party wants to end the arrangement. Also check relevant state and local laws to make sure someone living in your home under this kind of arrangement would not be considered a legal tenant entitled to certain protections.
Most shares happen through word of mouth, but at nationalsharedhousing.org, you can also find a state-by-state directory of resources. For a service-only share, Dunn says the tenant usually invests 10 to 12 hours per week, though many shares combine less service with some rent. “It’s not a full-time job, and it’s not indentured servitude,” Dunn said. “But it can be a mutually beneficial way to get your chores done, improve your monthly finances, and help launch a young person who’s short on funds.”
This article also appeared in the September 2014 issue of Consumer Reports Money Adviser.
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