Property taxes. Utilities. Mortgage payments. There are all kinds of ways that our homes cost us money. Many of us hope that it will all pay off in the long run when we sell our house and property for a profit.

But there’s no need to wait that long. You can make money from your property right now with one of the business ideas discussed in this article.

• What to Consider Before Monetizing Your Property
• 5 Benefits of an Income Property
• How to Make Money From Your Property
• Tips on Making Money From a Rental Property
• How to Earn Money From Your Vacant Land

What to Consider Before Monetizing Your Property

There are two important points to consider before you throw down the drawbridge of your castle. The first is insurance risk. If you are using the property in ways not specified on your insurance policy your insurance may (and likely will) be invalidated in the case of a fire, flood or another catastrophe. However, you decide to use your property you must acquire proper insurance coverage.

Read Also: What Countries Are Good to Make Money in Real Estate

The second is to make sure that you are not taking on more than you can handle. Renovations can be physically trying as well as expensive. And not everyone is cut out to be the host of a Bed and Breakfast or a wedding venue.

But if you’ve thought carefully about both of these things, why wait and see if you make any money out of your home when you could be making money off it immediately. Read on to find out how.

5 Benefits of an Income Property

A 2019 Gallup poll found that 35% of American respondents say real estate is the best long-term investment option; while 27% say stocks. If you have cash lying around and want to put your money to work, one investment option to consider is an income property.

An income property is a property bought and developed with the intention of earning revenue from it.

Income properties can be residential, such as single-family homes or multi-family properties, or they can be commercial properties. Owners make money through holding and renting the property while it appreciates, then selling it for a profit.

Before any investment is made, the U.S. Government advises considering the following questions: 

• What type of earnings can you expect on your investment?
• How quickly can you get your money, if you need to sell or cash in your investment?
• What interest can you expect to earn on your money?
• How much risk is involved?
• Are your investments diversified?
• Are there any tax advantages to a particular investment?

Once, you’ve decided that you’re ready to make an investment with your money, here are five benefits to buying an income property.

1. You’re In Charge

You choose what property to invest in, which tenant you’ll rent to, how much you’ll charge in rent, and how you’ll manage and maintain the property while renting it to tenants. You can use services like Airbnb or VRBO to provide short term vacation stays or use a property management company to help you find and service long term renters.

While investing in a stock or mutual fund gives you some freedom (as you’re able to choose the stock or mutual fund you wish to invest in), you are still allowing someone else to manage and control your money.

2. Property Appreciation

One of the most unique opportunities about investing in real estate is that you can use a small amount of your own money while borrowing the rest, often four to 20 times more, from a lender. This is called leverage. If you purchase a property using significantly more debt than equity, the investment is said to be “highly leveraged.”

Using Leverage:

You invest $10,000 of your own money to buy a property and borrow $90,000 from a bank. By combining your money with the bank loaned money, you’re now able to buy a $100,000 asset.

Let’s assume that each year, for 10 years, your investment property will appreciate by 5%. Here is where the ability to leverage benefits you. The appreciation is on the entire $100,000 asset, not only the $10,000 of your own money.

Year 0: $100,000
1.05 (appreciation)
Year 1: $105,000
1.05 (appreciation)
Year 2: $110,250
Year 10: $162,889

After 10 years, your property value would have increased by almost $63,000 dollars. Thus, you would have turned your $10,000 investment into over a $60,000 appreciation profit simply by using leverage.

3. Money in Your Pocket

If you intend to place tenants in your investment property, you will be able to receive rental income. Any money left after paying your expenses will be money in your pocket.

Suppose you have a tenant whose rent $1,100 a month and your PITI mortgage payment is $700 a month. Thus, subtracting $700 from $1100 will leave you with $400 to go into your pocket each month.

From this $1,100, assume about 5% in monthly maintenance costs and 5% in vacancy costs. Therefore, you should put $110 into a designated bank account each month to deal with maintenance issues and potential vacancy costs. When all is said and done, you will have about $290 each month in gross profit.

$1,100 (monthly rent)
-$700 (monthly PITI mortgage payment)
=$400
-$110 (for maintenance and vacancy issues)
=$290 (your monthly passive income from the rental property)

4. Help With Your Mortgage

The most popular type of loan is a 30-year fixed rate mortgage. It has an interest rate that will remain the same for the entire 30-year term of the loan. In the beginning of the loan, significantly more money is paid to interest than to principal, but by year 15, it’s close to a 50/50 split.

Therefore, the longer you hold the property, the more of the loan principal your tenants are paying down and the more wealth you’re creating for yourself.

Say you have a $90,000 bank loan with a monthly mortgage payment of $500. In year one, approximately $385 of this payment will go towards paying the interest, while $115 will go towards paying down the principal on the loan.

$115 (monthly principal payment) * 12 (months) = $1,380 (principal reduction for the year)
$90,000 (original loan)
– $1,380 (principal payments after 1 year)
= $88,620 (loan balance after 1 year)

By year 15, approximately $270 of the monthly mortgage payment will go towards interest, while the remaining $230 towards the principal.

$230 (monthly principal payment) *12 (months) = $2,760 (principal reduction for the year)

Every year that you own this property, you’re using the tenant’s money to pay off your debt. By reducing the amount of your loan, you will be building wealth as you will eventually be able to access this money either by refinancing your loan or by selling the property.

5. Tax Write-Offs

As a rental property owner, you’re entitled to tax deductions. You can write-off:

• Interest on your mortgage
• Interest on credit cards used to make purchases for the property
• Insurance
• Maintenance repairs
• Travel expenses
• Legal and professional fees
• Property taxes

Depreciation

On top of all of these deductions, the government also allows you to depreciate the purchase price of your property based on a set depreciation schedule, even if your property is actually appreciating in value.

Using our above example, you receive $3,480 in rental income for the year ($290 each month * 12 months). If you made this money at a regular job or in the stock market, you would lose a significant portion of it to pay income taxes.

However, by owning a rental property, you can offset the $3,480 income with the depreciation expense for your property, thus being able to reduce (or completely eliminate) the amount of taxes you have to pay on rental income.

How to Make Money From Your Property

Add a Rental Suite

If you live in an area where it’s legal, you can add a rental suite to your property. If you don’t have room inside for a classic in-law or basement suite, consider converting your garage or even, if space and regulations allow, build a separate free-standing structure.

Be sure you research the regulations for legal suites in your area before you renovate or build. It’s common to require legal rental suites to have to have their own separate entrances, for instance, as well as full kitchens and bathrooms.

Also be sure that you research how much income your suite will bring in before you create one. Calculate how long it will take you to get back the money you have to spend on your renovation before you will start making money as a landlord. Rentometer is a handy tool for checking rental prices in your location.

Rent out Accommodation

The suite idea doesn’t work for you? You may still be able to rent out part or all of your property if you live somewhere desirable. And don’t think that you have to live in a resort area for your home to be desirable.

Being close to a college or university, a hospital, a big employer or even living in a city with a tight rental market can make your property a place someone would like to rent.

The first step to making money off your rental is deciding what space within your home you’re going to rent. Bedrooms with their own bathrooms will obviously rent for more than a bedroom with shared facilities.

To make the most income you might consider giving up your master bedroom if it has an ensuite. Then research what your accommodation might rent for. Spruce up as necessary. Take some good photos and voila! You’re ready to sign up to be an Airbnb host or put your rental listing on craigslist

If you live in a place that appeals to tourists, you might want to consider moving out and renting your whole property in season. This is assuming you can live somewhere that would make this a positive cash flow situation.

Run a Bed and Breakfast

If you have several rooms available and want to maximize your rental income, turning your home into a Bed and Breakfast could be the way to go. Being able to rent out several rooms in your house nightly or even weekly can be a lot more lucrative than renting by the month.

Operating a Bed and Breakfast requires more of the hosts than just renting out a room — and providing breakfast is just the start. Research what it takes to start and operate a BnB before you start down that road.

Rent out Storage Space

But what if you don’t want to be a host or a landlord but you still have some available space that you’d like to convert into steady income? If the size and characteristics of the space are right, you might be able to rent it out monthly as storage.

Lots of people have vehicles such as boats, RVs, and motorbikes that they want to protect from winter weather but have no space to keep at their homes. Some are looking for year-round storage options.

Letting someone else store their vehicle in your garage, shed, or barn could bring in some handy monthly income. Have space to build or convert? There’s an ever-growing demand for storage units.

Just as with rented rooms, take good photos of your space for advertising purposes, and be sure to note any special features (such as having a heated space) that will make your rental stand out.

If you have an acreage with unused space you can use it for outdoor storage as well.

Become a Market Gardener

Even if you live on a standard suburban lot, you can grow enough fruit, vegetables or flowers to sell. If you live on an acreage, you have even more growing possibilities. In many places, it’s common to see roadside stands selling fresh flowers, fruit, nuts, and local produce in season.

With increasing numbers of people becoming ever more concerned about the safety and wholesomeness of the food they eat (witness the growth of the organic food industry), the market for fresh, local food is burgeoning.

So if you have one, why not put your green thumb to work and sell what you grow from your own property and possibly at a local farmers’ market?

Hold Events

If you own an acreage or small farm, you might be able to make money holding events. You don’t have to hold big concerts or music festivals to do it (although you can, of course, if you have the right property and the desire to hold such an event.)

Many small farmers and landowners make a steady profit from agritourism, setting up seasonal mazes and labyrinths, providing hayrides, farm tours, and demonstrations and offering special event dinners.

Outdoor weddings in pretty, rural locations are always popular in season. If you own agricultural land, though, remember to check and see what commercial activities are allowed on farmland where you live before you start operations. Some activities may be restricted, prohibited or require special permits.

Start a Home-Based Business

All the ideas above for making money from your home are home-based businesses, but they’re not the only possibilities, by any means. Whether you want to actually work at home or use your home as your new small business’s base, operating a home-based business (rather than a non-home-based one) has advantages.

Running your business out of your home, for instance, helps keep your business’s overhead down, has income tax advantages, and, if you’re able to work at home, can be a great way to stay home with your children while making an income.

Tips on Making Money From a Rental Property

If you own a house or apartment for your own residence, for example, you need to pay for maintenance, repairs, taxes, mortgage interest, landscaping, utilities, or a homeowner association fee that covers some of these expenses.

If, however, you own a house or apartment available for renting or lease, you can generate income with the property, and in some cases, end up with positive cash flow after all those expenses are paid for.

Being a landlord is a viable vocation; after all, landlords exist for every rental tenant, and they often thrive financially. Sasha, a former writer for Consumerism Commentary, owns several properties. She shared tips for buying a rental property for prospective landlords based on her own experiences.

Succeeding in the business of rental properties requires a certain set of skills and desires, and making a living isn’t always as easy as others would lead you to believe. If you want to earn a living, for example the equivalent of a $50,000 salary, you’ll need to profit more than $4,000 per month.

That’s a lot of pressure. Consider these tips below before you decide to get into the rental property business to determine if you have what it takes to be a landlord.

Do you like “doing it yourself?”

If you’re a handy person who likes doing your own work around the house — light plumbing, perhaps some construction, yard work, and so on — you might be a good candidate for becoming a landlord.

If you’re just starting out, it may be too expensive to handle outside contractors if you expect to turn your rental income into profit. Doing the work yourself saves money.

Do you know the right people?

If you plan to expand your property portfolio beyond one or two locations — and if you want to earn a living, you’ll likely need to expand quickly — you’ll reach a point where you can’t handle all the work yourself. You’ll need the services of cleaners, movers, and handymen.

For example, if you need air quality testing in Tucson, AZ (or your area), then you’ll need to hire the best firm and negotiate regular cleaning schedules.

You’ll need to call in trusted contractors, and if you have personal relationships with contractors, you’re in a better position to negotiate discounts and enhance your overall profit.

These relationships take time to build, and it takes time to find the best people to hire for the work. If you’re able to begin your adventure as a landlord with these relationships already formed, then you’ll be in a much better position.

The same is true about real estate agents. If you have connections in this business, you will have better access to potential tenants, reducing your advertising costs. Word of mouth is incredibly important, and knowing agents can remove some obstacles before you even get started.

Can you handle the 24-hour responsibilities?

Hiring a company to manage your properties is an expense that cuts into your profit. Depending on the location, you may be able to afford this from just your rental income.

If that’s the case, work with a property management company who will answer the phone at any hour to fix any household problems that arise. Otherwise, be prepared for calls in the middle of the night. If you’re starting your adventure with rental properties while working at another job, you will find yourself with competing priorities often.

Do you like dealing with people?

Some tenants can be difficult, and in most states, tenants have legal rights that level the playing field in disputes. If you’re able to screen tenants well and have a choice of potential residents, you can carefully choose who will be living in your house or apartment.

If, however, you need to fill a vacancy to prevent losing money every month and there aren’t enough tenants interested in the property, you may have to accept a tenant you might not like to prevent negative cash flow.

Even if you believe you’ve chosen well, dealing with strangers is not for everyone. Tenants will certainly not care for your property as much as you would if you were to live there. Even nice people can surprise you in a tenant/landlord relationship.

To become a landlord with a successful business, you’ll need to be able to deal with people who might be different than you in terms of values and personality.

Do you have cash and savings to buy the properties?

The great thing about buying a house with cash rather than seeking a mortgage is that you can eliminate the expense of the mortgage payments. Every cent of rental income you receive, after maintenance expenses are paid, is profit. That can make the difference between a rental property business that succeeds and one that struggles.

Leveraging your property purchase by using other people’s money — a mortgage — can turn out to be profitable when property values increase, but that’s not guaranteed. Loans open up the possibility of becoming a landlord to more people, easing the affordability of properties.

Having the cash to buy the property outright is not necessary, but if you have the money and are willing to invest in your own business, it will be much easier to generate a positive cash flow.

Can you charge high enough rent to cover your expenses?

In some locations, monthly rental properties are very competitive. That can drive down prices, decreasing your profit. If you’re competing in an area where most investors own their properties outright without a mortgage while you do have mortgage expenses to contend with, you have less pricing flexibility than your competitors have. You need to charge high enough rent to cover your expenses and take home a profit.

With mortgage payments to contend with and a tough competition, you may only be able to profit $200 to $400 per month on a property. That’s $4,800 a year, a far cry from the $50,000 we’re talking about for earning a living.

You’d need to own over 10 properties profiting $400 per month in order to reach that target. With volume, you may be able to increase that per-property profit due to economy of scale, buying materials in broke, and receiving significant discounts from contractors.

You might be able to reach the annual income target faster, but it will still take a long time to reach the number of units necessary. Use this mortgage calculator to assist in determining how much profit you might generate.

In other locations, though, you can charge much higher rent compared to the purchase price or mortgage payment. Property prices still tend to be high in New Jersey, so potential for profit isn’t as great.

Head to other areas of the country, and you can buy properties that command rental fees of $1,000 or more for just over six figures. If your monthly mortgage payment is $350 and the rent you can successfully charge is $1,000, your path to earning a living of $50,000 annually just got much clearer and shorter. With some time and volume, you could easily exceed this.

How much work are you willing to do for an extra $400 a month?

Work at the beginning may pay off when you add additional properties, but the path to millionaire status through rental properties is not as simple as television shows on HGTV might lead to to believe.

You may profit in terms of your financial statements, but if you consider your time and your sweat equity worth something, the calculation gets a little trickier, particularly when you’re doing more work to get started.

Even in markets were home prices have remained relatively high, it’s possible to earn a living with rental properties. The work isn’t for everyone, and that’s good; those who are willing to put the necessary labor into creating a successful business will be rewarded. Earning a living isn’t as easy as being a landlord for one property, however.

How to Earn Money From Your Vacant Land

Vacant land can become an income producing asset. Land is valuable, and while land may be most valuable when a structure is built on it, this doesn’t mean it can start producing income for you now.

We’re going to explore a few business ideas for vacant land that owners can implement to make money off of their property.

You can make money buying land in a few ways:

Sell the land

You can hold on to the land and sell it in the future. This is a return on investment that can be very high, but you need to understand how land in your area appreciates. Land can also be cleared, leveled and prepared for building, which will push the price of the land up drastically.

Boat storage

A simple way to make money off of your land is to allow others to use it for storage. Boats are a very popular storage option because owners will leave the boat on your property all winter long, and come warmer weather, they’ll take their boats to the water. Storing a house boat can cost $125+ per month at some storage places.

Foresting the timber

Your land’s timber is valuable. A lot of owners will plant trees, hold on to the land and sell the timber when it can be harvested. You can also use the trees for your own firewood business, selling the wood off during the colder season.

When used as a source of timber, the type of tree will dictate how long it takes for the tree to mature. Maturity can be 7 years or 50 years – it all depends on the wood type.

RV storage

RV owners often don’t have the space to keep their “toys” on their own property. Storage facilities are filled with RVs, and all it takes is a little vacant land to be able to store an RV. Of course, you’ll need to allow access to the land, but this shouldn’t be hard with a bit of clearing.

Storage fees can be $50 a month or $400 a month. Typically, indoor storage is the most desirable, but if you can fit 10 RVs on the property at $50 each a month, you’ll have $500 in easy income.

Campground

The rise of big cities has led many people to camp when going on vacation. A nice, peaceful time away from civilization is all that a lot of people need to feel grounded.

The great news for a lot of people is that there are campground options everywhere. And as a land owner, people will pay to simply camp on your land. I was recently looking at a campground, on a person’s own private property that wasn’t utilized.

Read Also: How to Make a Lot of Money in Real Estate While Young

The price was $20 or $25 a night, and you could easily fit 10+ camps on the land, or $200 – $250 in potential camping fees a night. You’ll want to find out how much insurance would cost for this type of business venture.

Solar energy

If you have the money to install solar panels or want to rent the land out to a company that wants to install solar panels on your land, this can be a very lucrative option for you.

The goal is to work with energy providers or companies that want to purchase the solar energy you produce. A lot of small businesses are popping up that are creating their own solar farms and selling the energy back to electric companies. You can work with these businesses, or pay for the upfront costs yourself.

Horse stables

Horse stables are booming. People want to own horses, but few have the land to accommodate these beautiful creatures. You can have your own horse stables, or you can even allow just riding on your land.

A lot of owners will install their own barn for the horses, and they’ll demand $400+ per month in some cases. You will find these prices are even higher in metropolitan areas.

You need to do your research in your area, but if you have a couple acres of land, build a stable and clear a space for riding, you can demand top dollar.

Junk yard

This might not be a business everyone would entertain, but a junk yard is an easy way to make money. Unwanted items are brought to you, you store the items on the land, and then sell the items for scrap.

This can become a full-time business, but this is a hands-on way to use vacant land that many owners pass up because they have too many commitments.

Hunting

A lack of large parcels of land has caused hunters to rent private land for their hunting needs. The great part is that you don’t have to do anything besides give the hunters the right to hunt on your land. A hunting property is easy income, and hunters will pay several hundred dollars during prime hunting season. There are many sites online, selling a wide range of hunting accessories including the magpul magazine and other magazines. for all varied hunting encounters.

Billboards

If your land is located near a high traffic area, you can also place a billboard on your property and rent it out. Businesses will pay good money every month to rent the space. Costs for four weeks of advertising are $1,800 in Spokane, Washington based off of 1.7 million weekly potential impressions.

The same sized billboard in New York, New York would cost $14,000 every four weeks, with 8 million potential weekly impressions.

Parking lot

Prime land in a hot spot can earn you money off of parking fees alone. A popular lake near me has very little parking, so land owners will charge a minimal fee to allow people to park on their land. Dirt and grassy areas are common, and the lot isn’t a high-maintenance venture.

These are just a few of the very easy methods of using your vacant land or your rental town turn a profit. Since there are little-to-no costs in upkeep for these ventures, they’re a great option for most land owners to pursue.