Rent or mortgage payments often represent the biggest monthly expenses in one’s life. One young homeowner has figured out a way to flip her house payments into a source of passive income.
What To Know: 26-year-old Precious Price, who is a CNBC contributor, built a luxury tiny home in her backyard for around $35,000 so she could free up her main house for rentals. Now she essentially gets paid to live out back, according to a CNBC report.
“As I stared out the kitchen window into my huge backyard, something clicked: I could use that space to build a tiny home to live in, and fully rent out the main house,” Price wrote in a contributor piece.
In 2019, she bought a 1,400-square-foot house in Georgia for just under $200,000. She got started by listing spare rooms on Airbnb Inc (NASDAQ:ABNB) to generate extra income, but when the pandemic hit, the amount of people looking to share living quarters dried up.
That’s when she got the idea to build the tiny home in her backyard. She actually purchased a shed and hired contractors to build it out into a home, which helped to simplify the process. She paid off the entire cost of the build in less than two years.
Check This Out: This DIYer Built A $17K Tiny Home That Generates $50K A Year — Now He Works Just 2 Hours A Week
She considers the 296-square-foot backyard house a “luxury tiny home” and she’s profiting from the build. She spends $1,580 per month on her mortgage, property taxes and utility bills, but she generates $2,725 per month by renting out the main house. That leaves her with close to $1,150 profit on a monthly basis, which means she’s getting paid close to $14,000 a year to live in her backyard.
There are some drawbacks. She has had to downsize her wardrobe and cut back on hosting get-togethers, but it’s well worth it. She’s even planning to add a guest suite to the main home to be able to offer more rental options.
“It’s amazing what you can do with a bit of backyard space,” Price said.
See Also: How This Millennial Generates $40K Per Month Working 30 Minutes A Day: ‘It’s About The Experience’