I got a reader email today that was such a great topic I had to share with everyone. In the interest of keeping him anonymous, let’s call him Homeowner Hank. Here is Homeowner Hank’s email:
My sister showed me your blog recently and I have learned a lot from reading it. I have a long way to go to get better at managing my finances and am not the most organized person in general. My current situation is I have a house that is paid off but no job. It is still expensive to live and I don’t like having a negative cash flow. Should I perhaps rent it out, or even sell it? Thanks, any thoughts are appreciated.
First thing’s first. This guy has an awesome sister. Second of all, he has great taste in personal finance blogs.
More importantly, he’s honest about his organizational and financial shortcomings, and wants to improve his current situation. Way to go Hank!
Remember, I’m not a financial planner, lawyer, advisor, or anything else official; I’m just a guy with a website. I’m happy to share my opinion but the real decision is up to YOU Homeowner Hank!
Don’t Sell The House
If you want to generate positive cash flow, selling your house isn’t going to help you do that.
It will give you a big sum of money, but your cash flow problem will get even worse when you start paying rent or a mortgage for a place to live. I’d recommend keeping the house as long as you can, and only consider selling if you find yourself in a financial situation where you can’t pay your bills and don’t have other options.
Get More Information Before Renting Your House
You’ll want to determine how much income you can get from renting your house, how much it will cost you to live elsewhere, and how much time/money it will cost to become a landlord.
I’ve never owned a property in my life so I honestly don’t know enough about how it works to give you good advice one way or the other. If you want to explore doing this further I’d recommend you talk to someone who has done it before, like Paula at Afford Anything.
Consider Renting a Room
If you want to generate positive cash flow but don’t want to find a new place to live, your best bet might be renting out a spare bedroom. This is the first option I would explore.
If you have a friend or family member you wouldn’t mind living with, ask them if they want to rent out your spare bedroom. If you don’t know anyone who needs a place (or would prefer not to mix family/friends with business), you could find someone on a site like http://www.easyroommate.
This option allows you to keep your house and still generate income from it. It all just depends on if you are comfortable living with a roommate.
Find a Job
I’m sure you’re already looking and I don’t want to insult your intelligence by offering such an obvious solution. However, I don’t think any one of the options above (renting out the entire house or renting a single room) is going to give you enough money to generate positive cash flow.
Either finding a job or starting your own business is the most likely long term solution to your money problem.
Good luck Homeowner Hank!
Readers: Do you have any advice for Homeowner Hank? What would you do in his situation?
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Carnival of MoneyPros at Sweating The Big Stuff
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