Day 6 Cashed up Christmas – make thousands by renting out your space

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Want to earn some extra cash to help pay off your mortgage or afford a deposit for a house?  One of the oldest ways to do this in the book is to be a landlord and to rent out part or all of your house.

“I like my privacy too much to share my home,” people would often say to me as an excuse not to rent out properties.  Australians love privacy, right?  We want to feel like we can walk around naked if we like, we don’t want nosy neighbours and we want to be able to put our feet up and watch bad TV at the end of the day.

But I’m here to tell you that if you are NOT renting out some of your spare space that you are missing a huge opportunity.  Two actually: the opportunity to make money, and the opportunity to get to know some new people who might even end up becoming good friends.

I had homestay students, on and off, for over six years.  Sometimes I had housemates as well.  This extra income helped two junior public servants amass ten investment properties.

I won’t say it was easy.  While my work colleagues were down at the pub (or in the case of Canberra the lovely Old Parliament House courtyard) for the end of week drinks, I was hot-footing it back home to cook for international students.  I made them three meals a day.  On weekends we would often take them on excursions, sometimes even to the coast.

Sometimes the students were severely culture-shocked, and in a couple of cases, we had some discipline and attitude issues with high school-aged children.  But mostly it was a rewarding and beneficial experience. I am still in contact with several former homestay students – some might be reading this blog post now!  Two met their husbands in Canberra, married and now live here with their kids.  What confident young women they have grown into, and how different from the shy students they were when they first arrived in Australia.

There are broadly four ways you could rent out some spare space to make money (if you know of more, do tell me!)

  1. Find a flatmate or housemate.  This is the traditional way to rent out your house and is made easier by online platforms such as flatmates.com.au.  For X Generation people such as myself, living in a share house was kind of a rite of passage. I never had bad experiences aka He Died with a Falafel in his Hand. My first share house was in a gorgeous art deco apartment and we nicknamed ‘Melrose Place’. I went from living at home to suddenly belonging to a set of ‘beautiful people’ with a social life to match.  You learn from living with others about different attitudes to things like cleaning, personal hygiene and cooking (e.g. we had a sleazy used-car-salesman flatmate who, when he moved, left a pile of lingerie photos of women he had been involved with).  I had a flatmate in my last house, and this year decided to try it again; the latter experience was much better than the former (best not to elaborate).  The advantage of a flatmate is that he/she provides stable and consistent rent, is responsible for joint cleaning (in theory at least) and can end up becoming a friend. A disadvantage is that they are there to stay so if you don’t get along it can be unpleasant.  Also managing access to joint spaces such as bathrooms and the kitchen can be fraught (I cook a lot, and experiment a lot and like space to do that).  It is good to have ground rules if your flattie suddenly has a boyfriend or girlfriend.  The clearest rule I have seen on this is a directive that if someone stays for more than three nights a week they are in fact a flatmate and should contribute to rent utilities and cleaning. Speaking of rules, make sure you have a lease in place that is consistent with that offered by the real estate institute in your state or territory.
  2. Short term tenant.  This is similar to a flatmate, but in this case, you rent your place out to someone for a few months fully furnished.  Sites such as Gumtree, or Facebook groups such as Canberra Share Housing & Rooms for Rent.  Last year I hosted a lovely young couple for Taiwan for two months. They were in Australia on a working holiday and travelling around, so they were not able to commit to a long-term flatmate arrangement.  It was great to catch up with in Taiwan six months’ later, and I know that we will be friends for life.
  3. Airbnb or similar.  A few years ago Airbnb was novel, but now it has almost become almost commonplace. Some people complain that Airbnb has priced out people wanting to rent or joint share a house.   Some people talk about the problem of wild drunken parties where people trash a place and annoy the neighbourhood (I have not actually heard of a first-person encounter with this).  Meanwhile, others love the experience of acting both as a host and a guest.  My neighbour is a successful Airbnb host who has gained ‘super host’ status. While over to dinner the other night he shared his positive experiences – he said that his guests cannot do enough to be helpful, and they have left a series of ‘thank you’ post-it notes on his fridge.  I considered Airbnb for my place but decided against it for three reasons.  Firstly, I have young children and I felt it could be unstable for them to have different people in the house.  Secondly, I wasn’t sure if I had the time and energy to devote to looking after house guests.  And thirdly, the body corporate in my building passed a resolution banning Airbnb and while I doubt they can legally enforce it, I didn’t want to go to war on this (my neighbour has carried on despite the resolution).
  4. Homestay students.  As I mentioned at the start, I had homestay students for six years from diverse places such as China, Taiwan, South Korea, Japan, Thailand and Colombia.  I learnt so much about their cultures during this process, and I especially enjoyed learning about their different cuisines.  The advantage is that you get a unique international experience; the students also form an opinion about Australia based on their experiences with you (no pressure!).  At the time it paid quite well; I had just bought my first house and it helped me afford that house and expand to more properties.  The disadvantage is that not all kids are polite, well mannered and independent.  Some, in particular, come from wealthy families where they have domestic staff who have waited on them since they were born.  Being in Australia was often the first time that they had to fend for themselves.  It was also the first time without Mum and Dad (and Grandma and Grandpa) so they sometimes went a bit wild.  We once gave a dressing down to a 16-year-old girl who came back late; she had been out drinking whisky with a guy she barely knew.  A good friend who also had students said that once a female student liked ice-cream so much that she got up in the middle of the night and ate most of a 6-litre punnet – and was then violently ill. Homestay makes more sense economically if you live in a traditional suburban home, once you factor in food, water and heating, you wouldn’t otherwise earn much more than if you rented the room out to a flatmate.
  5. Car space.  Even here in Canberra, urban centres are hollowing out car spaces.  While some areas are blessed with good public transport, inevitably people still want to drive to work.  If you have a secure carpark you are not using, consider renting it out. I used to rent one close to my work for $7 a day ($35/week or $70 a fortnight).  We are offering access to the carpark in my inner city apartment to my partner’s daughter: we are walking distance to her workplace and this will save her $18 a day on parking.
  6. Granny flat.  A good investment is to buy a house with a granny flat in the back, or (if zoning allows) to build one in your backyard. In nearly all cities there is a shortage of self-contained accommodation. My last house had a granny flat and I never had a problem getting tenants.  Young couples who are students or just getting their careers established really look for affordable options such as granny flats.  The disadvantage is that you no longer have exclusive use of your backyard.  I used to get annoyed by a previous granny flat owner hanging their knickers out in direct line of sight from my balcony rather than using the clothesline around the corner.  But really, is it such a big deal (I learnt just not to focus on it)?  In winter you never see granny flat tenants, and in summer we would socialise more and sometimes have BBQs together.  Granny flat tenants have often shared home-cooked treats with me, and I have reciprocated when I have been cooking.  My sons used to love playing with the son of my granny flat tenants, and on one occasion the tenants babysat my kids at short notice so that I could accept an offer to go to a concert of The Whitlams.  And if you go away, you have someone there to effectively housesit for you – they might even water your garden if you ask nicely. I lent my granny flat tenants my car one summer, and they reciprocated by picking us up from the airport.
  7. Storage.  If you have a secure garage or carport, or access to a shipping container, consider offering part or all for storage.  Canberra (where I live) has a transient population – people often head overseas or interstate to work or to study.  You need to consider carefully what your legal obligations are for goods stored on your property, and in particular to ensure that you have sufficient insurance and safety in place.  You also need to communicate with the people renting your space about the risks: to what extent would they be covered if lightning hit the shed and burnt the shed down if it was burgled, if something fell and broke, or if there was a freak flood?  Also consider how access would be managed, and what would happen if they stopped paying and disappeared?  After what point in time would you sell off what was in your shed to cover your costs?

In my last home, I calculated that I earned around $20,000 extra a year (after increases utility costs) from sharing my house.  Assuming the cost of a flatmate, my additional income would $10,000. How much extra income could you earn?

Your challenge for today is to consider how you could convert some unused space into cash.  Do you have a spare bedroom filled with ‘stuff’ you don’t actually need? Or a shed that is also filled with things you never use?  Create some space and rent it out.

Cashed Up Christmas savings tally:

Wants versus needs – estimate $300 just on Christmas
Kogans mobile $167 plan 365 days
Growing your own herbs $182 a year
NBN savings:  $294.99
Weekly eat at home savings (estimated over a year):  $1,300
Renting out space in my home: $10,000 a year

Total:  $12,243.99

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