When people think about real estate investment, they often think about buying tons of properties and renting or flipping them. However, real estate investment is not necessarily just an investment in physical property; it can also be an investment in your future. When asking people if they would prefer to live in a house or apartment, most would say a house. Yet, many people cannot afford a mortgage on their own. This is where sharing your house, a more recent real estate investment option, comes into play.
What is house sharing?
Imagine you are a young couple. You buy a 3 bedroom, 2 bathroom house, but you only need one bedroom and one bathroom for yourselves. Instead of paying a large mortgage by yourself, you decide to separate two of the bedrooms and one bathroom from the rest of your home. This pseudo-apartment can be rented out to bring in extra income, while you live in the rest of the house.
Why house share?
House prices are far too high for most Millennials, who still live at home and work a low-paying job while riddled with student loan debt. Even a married couple often cannot afford the monthly payment, and if an emergency were to arise, there is no backing out. Rather than put themselves into this situation, most Millennials prefer to rent or live with their parents. However, sharing your house can be a smart choice for the Millennial that will be able to afford their home, but just want to get a financial head start in the meantime.
What are some potential problems with home sharing?
Laws are a big problem, as it may not be legal to share your home in your jurisdiction. Other problems can include annoying or delinquent tenants, insurance costs, and general roommate tension. The worst part is, you will have to live with this person. That is why it is important to look into each potential tenant even more than you would for a traditional renting situation.
Who is an ideal candidate to home share?
On the landlord side, it would typically be a couple or single person who has lived with other people and does not mind sharing some of their space. It is also someone who is used to sharing walls with someone else, as annoying as that may be. Finally, it is someone who can pay the full mortgage payment every month, just in case the tenant cannot.
On the tenant side, it is someone who is respectful of the fact that they are living in someone else’s house, not their own property.
If you are young and want your mortgage to pay for itself, you should seriously consider sharing your house with someone else. Not only will it help you financially, but it will also help you appreciate living on your own once the tenancy is done. Keep in mind that sharing your house does not need to be a long-term plan; it can be a short-term option to allow you to save money for the future. Still, be prepared to have this person around for as long as their lease agreement states. If you think you can handle any potential downsides, I encourage you to look into this kind of arrangement.