In this post, I want to highlight some unique options to help you get ahead and start saving that precious money you work so hard for. You can still save on housing costs, despite the sky-high costs these days. You just might have to get a little creative.
Your rent or mortgage is likely your biggest monthly payment. In 2017, Americans spent on average $19,884 on housing according to the Bureau of Labor Statistics’ expenditures report. The median household income in 2017 was $77,713. So, if you’re a middle of the road (income-wise) family, you’re housing costs are 25% of your income, which isn’t too bad, right? What happens if you are one of the many families with an income much lower than the median? Most likely, you will be paying the same housing costs as everyone else, but with a much lower income. Or what happens if you are trying to save money on your housing costs to – I don’t know – retire early or something?
Consider a Mobile Home:
The tiny house movement is all the rage, and I fully support and love everything about tiny living. If my husband would go for it, we would be two peas in our cozy luxury pod in no time. I want to take this idea a little further than that and talk about this option for the people who really cannot afford the average housing prices in the U.S. Home prices and rents are sky rocketing, and people with a lower income are having an increasingly difficult time keeping up with the prices.
At my job, I was training a student who was putting herself through x-ray school. I always enjoyed striking up the conversation with our students about how they are living and paying for school at the same time. It’s a topic that fascinates me. I usually get a generic answer involving school loans, but this student’s answer blew me away. She told me how her boyfriend had a camper, so they found a plot of land that they could rent long term from a mobile home park. She said they each paid around $450 per month. They had their own place for $450 per month in a market where it’s hard to find anything less than $1,000 a month in rent. She was putting herself through school and saving in the best way she knew how. After she told me this, she said, “Yeah, I guess you can call me trailer trash, now.” I said, “Nope, I’ll call you a genius.”
So, these days when I’m bored, I scour Craigslist and look for campers that people are selling for cheap and fantasize about the potential savings. Then, I think of all of the low income families that could use this idea as a way to save the money they earn, get ahead by investing their saved money, and eventually buy a real home. I also think of myself, how much more we could be saving if our living expenses were only $450 per month. I must admit, it’s a pretty tempting concept. My husband isn’t as adventurous as I am, so I don’t see it happening for us, but those numbers are no joke.
Consider a Duplex:
Instead of buying a single-family home, think seriously about purchasing a duplex. This way you can rent out the other side and have most, if not all, of you mortgage covered.
Here’s a quick example from the area we’re in:
The house above has two separate units. It’s listed on Zillow for $350,000. With a 10% down payment of $35,000, the monthly mortgage payment will set you back around $2,182 (this includes property tax, mortgage insurance, and home insurance). One unit is a small 1 bed/ 1 bath. The other is a 4 bed/2 bath. I checked on Rentometer.com, and the average rent on a 1 bedroom unit in this area is $950 per month. That knocks down your mortgage to a much more reasonable $1,232 a month, for a 4 bedroom unit. That’s hard to find at that price in this area.
Now, for the really exciting thought… if your family is small enough to live in the 1 bedroom unit for a while, you can rent out the 4 bedroom. It would rent for $1,925 per month. Now your mortgage is $257! Congratulations, you more than evened the playing field with your median income peers who are paying 25% of their income for housing. If you make $50,000 per year ($27,000 less than the median wage) your housing costs are now only 6% of your income! You could be putting away more money for retirement than those who make more that you.
Compare the example above with this home is listed on Zillow in a nearby area for $345,000:
Granted, it’s a nicer home overall, but it’s going to cost you. This is a 3 bed/2 bath home and it offers no rental unit. The monthly cost with a 10% down payment will be $2,148. That’s one hefty bill you’re stuck with every month.
Rent a Spare Room Using AirBnB :
If you are lucky enough to already own your home and are thinking it would be nice to have a little extra income to ease the burden of that mortgage payment, you could try renting out a room. There are a couple different ways to approach this method.
As a popular site for people looking for lodgings, AirBnB is a great place to list your spare room. The nice thing about Airbnb is you have short term renters usually for a few days or so. If you end up with an unfavorable guest, you know that you won’t be stuck with them for long. In Portland, OR where I live now, there are listings for rooms, ranging from $40 per night (in the suburbs) to $85 per night (in central downtown areas). The downside about Airbnb is that the income is not dependable. There will be months where you don’t make any money because no guests have booked your place. It’s unlikely you will be able to rent out your room consistently, and unlikely you would even want to because it’s exhausting constantly turning it over for the next guest.
Rent a Spare Room to Healthcare Givers
The other option is to rent to travelling healthcare givers. I personally like this idea better. You’re more likely to get good renters this way. If you rent to a healthcare giver (ex. nurse or imaging technologist) they’ll be background checked and working for travelling companies that vet them before they hire them on. They even have their own rental booking website called Travel Nurse Housing where you can sign up to become a host.
Another great thing about this method is that travelling healthcare givers go to hospitals to work for a few months and sometimes extend their stay. This is a nice compromise between the short term vacationers from Airbnb or a traditional tenant on a lease. All that said, renting out a spare room in your home is not for everyone. Being a good host is what will keep your guests returning. You must know how to make your guests comfortable and how to share your things. I would not be well suited for this. I’d rather live in the camper, but it’s a great option for some.
I hope this inspired you to think of ways you can cut living costs. Many people don’t even consider these options, because they don’t believe they can do it. These methods might be unconventional, but so is retiring early. Sometimes you have to do some unconventional things to get the unconventional results that you want.