You’ve worked long and hard to reach retirement, and now, it’s time for you to reap the rewards of all that hard work. It’s an exciting time and you’ve made plans to relax, spend time with family, travel and enjoy life more fully.
Sometimes though, retired homeowners find themselves in a position where they face unexpected and expensive demands on savings such as medical expenses, extended family needs or maybe you just didn’t anticipate the rising cost of living. You might be dreaming about that vacation on the islands, but your bank account is telling you that you will be staying at home for now.
There is good news though… If you do own your home, we’ve got 8 tips to help you get some extra cash that you might not have considered.
Tip #1 for Retired Homeowners: Sell Your Home and Downsize
Many retired homeowners bought their homes a long time ago when prices were far lower than they are today and if that’s the case for you, congratulations! It used to be that you bought your home and could be sure that you would be able to reap a substantial financial gain in the future. The 2007 housing crash taught many the hard lesson that owning a home is not a 100% sure bet that you can make a profit. In the current climate, this has many boomers wondering what to do.
According to AARP, nearly 80% of people over 65 own a home. Even in a buyer’s market, there are still some ways to pocket some cash by selling your home and downsizing. In the latest forecast, it was found that the best time to put your home on the market is in the spring and summer. Sales tend to fall during the winter months. Currently, home sales are going up and so are prices. Even if we’re in a housing bubble, and prices fall in the near future, they are still expected to level out at around 5.7%, and sales continue to increase at around 7%.[1]
Tip #2 for Retired Homeowners: Consider a Reverse Mortgage
Another option to consider is a reverse mortgage. This is a type of mortgage that allows you to pull the equity from your home in a lump sum or in small increments over time. The bank pays you, and you still get to live in your home for the rest of your life. To be eligible, you need to have enough equity in your home to make it a worthwhile proposition for the bank.
How this works is that the lender pays you, and they own the home when you or your spouse passes on. Most lenders have a clause that they will not sell the house until both spouses have vacated the premises. You need to read the terms carefully to see how they affect your heirs and other considerations that are unique to your circumstance.
The bank does not receive payments towards the principal or interest during the loan term. They expect to be able to profit when the home sells. If the home sells for less than the principle they have paid out, they can take a loss. A reverse mortgage has several advantages. You must be 62 or older to qualify. You do not have to have a certain income or credit, but you must be able to maintain your home in good condition and have paid down the loan balance substantially. If this sounds right for you, be sure to read any contracts carefully before signing.
We have a pretty in-depth article about Reverse Mortgages here: Reverse Mortgages – What They Are And Where to Get One
Tip #3 for Retired Homeowners: Rent Out Space
This is becoming a very popular way to create cash flow among retirees.
If you have extra rooms, or perhaps an addition to your home, it is possible to rent it out. You can choose to rent it out on a long-term basis or short-term basis using sites like Airbnb. If you are going on vacation and you were thinking about needing a house sitter, you can rent your home out on a temporary basis, and they will pay you to stay there while you are away.
This option is an excellent way to earn some extra cash, but you need to do your research before you choose this option. Your home must be in excellent condition and might need to meet certain safety or accessibility requirements. You will also need to check into how this would affect your homeowner’s insurance policy. You might need an extra rider or liability insurance. Also, you need to make sure you have a good contract that protects you in case the renter causes damage to your property. This can be an extra way to make some cash from your home, but make sure to do your due diligence first.
Some retirees are actually building really nice small dwellings on their property and living in those while they rent out their main house full-time. If you can find a great renter, this arrangement can be fantastic. You can read more about the financial and legal implications here.
Tip #4 for Retired Homeowners: Rent Parking Spaces in Your Driveway
If you live in a major city and have extra space in your driveway, you might have an excellent source of steady income. Many larger cities are known for their lack of parking availability. Commuters will often seek places to park outside of major downtown areas and then take other transportation to their final destination. Tourists and visitors will often try to find spaces outside of the main urban areas rather than competing for precious curb-side metered parking.
Your driveway could be an excellent alternative to crowded, over-priced parking garages. Sites like CurbFlip.com and JustPark.com allow you to list your driveway for rent, and people seeking spaces will use these sites to search for spaces near where they need to go. You can rent by the hour, day, or month. These services charge a percentage of what you make. Your driveway could be the overlooked source of income that you need.
Tip #5 for Retired Homeowners: In-Home Pet Boarding
If you are an animal lover, starting an in-home pet boarding service could be a lucrative opportunity. Services like Rover.com match people who are willing to care for pets with those in need. Like many of these services, the site takes its fees out of what you receive. You must undergo a background check, and the site provides training for potential sitters.
The amount that you make depends on the average rates in your local area. There are more opportunities for those near a large city, but this can easily work into a steady part-time or full-time opportunity. Another opportunity that you might want to consider is turning your backyard into a dog park. This will require some cash outlay from you to purchase equipment, but many people who have pets and do not have enough exercise space will pay to give their pets the exercise they need. If you have the space, this is also a great idea to entice customers for the pet sitting business.
Tip #6 for Retired Homeowners: Declutter Unwanted Stuff
We all know that as you live in a home for many years, you have the tendency to accumulate a lot of stuff. This turns into the garage or shed clean-out that you keep saying that you are going to get to, but somehow never seems to get done. If “Early American Yard Sale” has become your decorating style, you have an excellent opportunity to turn those things you no longer use into cash.
The best thing is that you are killing two birds with one stone. You are clearing your space so that you can enjoy it once again, and you are putting cash in your wallet for that vacation you have been wanting to take. If your collection goes back to the 1950s or 1960s, you might have some real buried treasure. Vintage and retro styles are a trend that is popular right now. These “youngsters” are hungry for authentic vintage pieces to add to their collection. They want our stuff, and they are willing to pay for it.
That old couch or vintage toy that you have sitting around could be worth more than you ever imagined. You can post any item, like those 4 step ladders that your somehow accumulated, on eBay. Etsy has an excellent market for vintage items, and you can get much more for your items than if you had a yard sale. You can also try listing them on Tradesy.com, Poshmark.com, and Gazelle.com. Before listing any item for sale, do some research to find out what it is worth. It might not seem like it would be worth much to you, but you do not want to undercut yourself.
Tip #7 for Retired Homeowners: Tap Into the Equity in Your Home
If you have spent decades paying down your mortgage and the value of your home has gone up, then you probably have quite a bit of equity built up. Getting into debt and borrowing against your home might not seem like the best choice in your golden years, but there can be times when going into debt can have some big payoffs. For instance, you might want to think about a home equity loan or home equity line of credit (HELOC) to purchase a rental property or make repairs to your home prior to selling it.
Sometimes, refinancing makes sense, too. For instance, if you can refinance at a lower interest rate, it might make sense. You can sometimes receive cashback when you refinance, but you might also have to pay higher closing costs. You can use this to lengthen the time that you have to pay off your mortgage and lower your monthly payments. This can increase your monthly cash flow and provide the extra income that you need. Whether this is a good idea or not depends on your situation, the interest rates that are offered, and your plans for the future.
Tip #8 for Retired Homeowners: Consider a Roommate
You might think that getting a roommate is something you only consider when you are younger, but there can be more advantages than just the money for boomers. Of course, getting a roommate means that you can lower expenses by splitting the cost of housing, utilities, and items like groceries. You already know that you must choose your roommates carefully, or it can quickly turn sour. The good news is that by now, you should have enough experience under your belt to make a good decision.
From the experience that comes with raising a family and years of becoming familiar with your likes and dislikes, you know what you can tolerate and what you cannot. This means that you can look for a roommate that is not only a good match but also someone who can help out with other things you need. For instance, if you or someone in your household needs help due to health issues, you might find someone who is willing to help. If keeping up with your housework and yard work is not your favorite thing to do, then you might search for someone who loves to do these things. A roommate holds many possibilities if you get the right match.
Now you have 8 ways that you can use your home to generate some extra cash. Even if you are comfortable, having a little extra can allow you to enjoy life even more. These ideas are just the beginning, and maybe they will spark some other creative ideas that you can try. Tell us what you think about these ideas. Have you tried any of them? If so, how did it go? We would love to hear your stories and other suggestions in the comments as we learn to navigate this stage of our lives together.