How to Turn Your Own Home Into an Investment

Updated August 2026

How to Turn Your Own Home Into an Investment

Homeownership isn’t just a place to live anymore, at least not for the millions of Americans sitting on space they never use. The U.S. homeownership rate hit 65.1% in 2013, and a huge chunk of that housing stock, spare rooms, empty garages, unused driveways, sits idle every single day. You don’t have to sell your house or move across town to put it to work. If you’re paying a mortgage on a place with a bedroom nobody sleeps in, that room already has value beyond shelter.

Real estate investment doesn’t require a down payment on a second property. You can generate passive income from the residence you already own, simply by letting someone else use part of it. That strategy lines up nicely with what happened in 2013, when national median home prices climbed 11.5% from the year before, according to the National Association of Realtors. Your house was gaining value on its own. Renting out a corner of it just adds a second income stream on top of that appreciation.

Why Renting Out Part of Your Home Makes Sense

Most homes have unused space somewhere. A 2013 Census Bureau study put the homeownership rate at 65.1%, but that number says nothing about how well people actually used their square footage. A spare bedroom becomes a storage closet. A finished basement turns into a dumping ground for old furniture. That’s wasted potential. Got a room with its own entrance? A student, a remote worker, or a newly transplanted professional would probably rent it in a heartbeat.

Here’s a number worth sitting with: shared rooms in cities like Chicago or Atlanta rented for $600 to $800 a month back in 2013, more than the typical household spent on utilities. Even a modest $500-a-month arrangement adds up to $6,000 a year. That’s enough to cover property taxes, mortgage interest, or a real chunk of your principal payment.

Airbnb launched in 2008, and by 2013 plenty of homeowners were already listing spare rooms through the platform. Short-term rental rules varied by city, but many urban and suburban areas allowed it with the right license. Consumer confidence was climbing that year too, according to the Federal Reserve, and more travelers were willing to pay for flexible lodging, particularly in areas that drew tourists.

Try this scenario. Say you’ve got a 620 credit score and need roughly $8,000 to replace a dying HVAC system. Rent a spare bedroom for $650 a month and you’ll clear $7,800 over twelve months, enough to cover the replacement outright. No high-interest personal loan, no new credit card balance, and your home equity stays untouched. That’s the kind of arithmetic that turns a dead room into a functioning financial tool.

Using a Bedroom, Garage, or Parking Spot as Rental Space

Not every home has a spare bedroom to offer. But almost every home has a garage, a driveway, or a backyard. Parking alone is scarce enough in dense cities that people will pay for it. Urban parking spots in San Francisco or New York ran $150 to $250 a month in 2013. Charge $100 to $150 for a driveway spot near a transit line or event venue, and you’ll find takers.

Garages open up even more options. Plenty of 2013 homeowners used theirs for bikes, tools, and holiday decorations rather than cars. Those same spaces work fine as rentals. The Federal Housing Finance Agency (FHFA) reported a 5.6% jump in house prices over the twelve months ending October 2012, so property values were climbing even as the broader economy was still finding its footing. Renting your garage lets you capture some return on that appreciation while you wait for the right moment to sell.

No garage? A large backyard can handle temporary parking or RV storage. Austin and Seattle both saw RV tourism pick up in 2013. Uber and Lyft were gaining riders around the same time, which meant more demand for flexible short-term lodging generally. Rent your yard to an RV traveler and you might pull in $20 to $50 a night depending on location and what amenities you offer.

Here’s a tradeoff nobody talks about enough: rent out the garage or driveway, and you lose that space for yourself. Park your own car there in winter, and a rental deal might mean scraping ice off your windshield every morning instead. The monthly check looks nice on paper, but weigh it against the daily hassle. Plenty of homeowners decide $120 a month isn’t worth giving up a heated garage during a Minnesota January. Figure out your own tolerance before you list anything.

Home-Based Business: Turn Your Space into a Revenue Stream

Working from home isn’t just a lifestyle preference. It’s a legitimate tax strategy. In 2013, the IRS let homeowners deduct a portion of rent, utilities, and mortgage interest for space used exclusively for business. That’s the home office deduction.

Run a freelance writing, design, or consulting business from home? You can claim expenses proportional to the square footage you use. A 100-square-foot office inside a 2,000-square-foot home qualifies for 5% of your costs. Spend $20,000 a year on mortgage and utilities combined, and that’s a $1,000 deduction, lowering your taxable income directly.

Companies like SoFi and Federal Student Aid were already helping people manage debt from the education that made remote careers possible in the first place. If you’re self-employed, your home can double as a client meeting space, a podcast studio, or a video conferencing setup, turning square footage you already pay for into a source of income.

Storage as a Rental Income Source

Plenty of people went looking for affordable storage in 2013. Experian’s credit monitoring tools were gaining traction that year too, a sign that consumers were paying closer attention to their finances generally. Few of those same people thought to rent out storage space inside their own homes. A basement, an attic, a garage corner, any of these can hold seasonal clothing, furniture, tools, or small business inventory for someone else.

UPS, FedEx, and Public Storage were charging $50 to $150 a month for small storage units around that time. Offer similar rates from your own basement and you’ll undercut their overhead easily. The catch is insurance.

Check your homeowner’s policy before you rent out anything. Most standard policies exclude third-party property damage or theft. You’ll likely need a personal liability rider or a renter’s insurance endorsement added. Both the FDIC and the Consumer Financial Protection Bureau (CFPB) urged consumers to review coverage carefully before starting any shared-use arrangement.

Short-Term Rentals: Vacation or Business Use

Short-term rentals can generate serious income. Vacation rental platforms were already active in Miami, Nashville, and Portland back in 2013. You don’t need a beach view or a famous skyline. Mid-sized cities pull in travelers too, for conferences, weddings, and family visits.

A 2013 National Association of Realtors study found that 78% of homebuyers wanted flexible space in a home. A bedroom with a private bathroom could rent for $100 to $150 a night during busy travel months. Thirty nights of that adds up to $3,000 to $4,500, roughly a full mortgage payment in some markets.

Some homeowners flipped the whole idea around: rent out the house during peak summer travel, then use the income to fund their own trip to visit family. FEMA warned that coastal homes, particularly those in VE zones, carried real flood risk. Inland properties don’t face that exposure, and short-term rental income there can help offset rising insurance premiums instead.

Real Risks and Trade-Offs

Not every space makes sense to rent out. The biggest cost is often privacy. Share your home with a stranger and you’re managing noise, cleanliness, and personal boundaries on a daily basis. Roommates and guests create friction, especially when the rules were never spelled out clearly.

Legality varies by city too. Plenty of municipalities in 2013 capped short-term rentals or required specific permits. FEMA and NOAA both stressed that coastal communities need to weigh long-term risk before listing a property. Flood-prone homes often see weaker rental demand and pricier insurance to match.

Damage is the other risk worth naming directly. If a guest breaks something, you’re on the hook unless you’ve got liability coverage in place. The FDIC has warned that uninsured personal property losses can add up fast. Screen tenants when you can, use a platform’s built-in screening tools, or simply require a deposit equal to a month’s rent.

Who should skip this entirely? If your home is already tight on space, and adding a renter means your kids share a bedroom or you lose your only work-from-home desk, the income probably isn’t worth the daily friction. A family of four in a two-bedroom house might clear $500 a month renting out the garage, but losing storage space and parking on the street can eat that gain fast. The math only works when the space was genuinely sitting idle to begin with.

How to Get Started: Practical Steps

Start by walking through your own space with a critical eye. Measure the square footage. Note what’s unused or barely used. A bedroom with a door and a window is ideal. A garage that hasn’t held a car in years is a strong candidate. A dry basement makes for solid storage.

Research local rules next. Call your city’s zoning office. Check with your HOA if you have one. Some areas require registration, a permit, or even a business license before you can rent anything out. The CFPB recommends understanding every legal and financial obligation upfront, before you list a single square foot.

Then price it fairly. Pull data from Airbnb or Zillow listings in your area. A single room in a shared home averaged $650 a month in 2013. A garage spot ran closer to $120 a month. Short-term nightly rates in tourist-heavy areas landed between $120 and $200.

Finally, put it in writing. A solid rental agreement covers rent amount, payment schedule, security deposit, access rules, and maintenance expectations. Nolo offers templates you can adapt, or check with a local legal aid group. Keep a signed copy for your own records.

Frequently Asked Questions

Can I rent out a room in my home without breaking the law?

Generally yes, but check your local zoning laws and HOA rules first. Many cities in 2013 allowed short-term rentals with a permit. FEMA advises homeowners in flood-prone areas to confirm insurance and risk levels before renting anything out.

How much can I earn from renting a spare bedroom?

Expect $500 to $800 a month for a private room with its own bathroom. High-demand cities can push that past $1,000. Over a year, that’s $6,000 to $12,000, enough to cover mortgage interest or property taxes.

Do I need to insure my home if I rent out space?

Yes. Standard homeowner’s insurance frequently excludes rental damage and third-party liability. You’ll likely need to add a personal liability rider or renter’s insurance endorsement. Both the FDIC and CFPB recommend reviewing your policy before renting.

Can I rent out my garage for storage?

Yes. Plenty of homeowners in 2013 used garages for storage or parking, charging $50 to $150 a month. Make sure the space stays dry and secure, and set up a lockbox or key exchange system for access.

What’s the best platform for short-term rentals in 2013?

Airbnb led the pack for short-term rentals in 2013. HomeAway and FlipKey were solid alternatives. All three required a profile, photos, and a clear listing description before you could go live.

How do I avoid tenant damage or theft?

Require a security deposit equal to one month’s rent. Run background or credit checks through Experian or TransUnion. Keep your home insured with liability coverage in place. Federal Student Aid’s website also offers free screening tools for renters.

Can I deduct home office expenses on my taxes?

Yes, as long as the space is used exclusively and regularly for business. The IRS bases the home office deduction on square footage: a 100 sq ft office in a 2,000 sq ft home qualifies for 5% of expenses. Keep detailed records and talk to a tax professional.

Are vacation rentals profitable in non-tourist areas?

Yes. People travel for work, family events, and conferences just as often as vacations. A 2013 National Association of Realtors study found 78% of homebuyers valued flexible space. A quiet suburb or a college town can still attract remote workers and conference attendees.

How do I handle a noisy or disruptive tenant?

Spell out quiet hours, guest limits, and cleaning expectations in the rental agreement upfront. If problems continue, issue a formal notice to comply, or start the eviction process. The CFPB advises documenting every communication along the way.

Can I use my home as a business location with online clients?

Yes. Freelancers, consultants, and digital marketers run entire businesses from home offices. You can deduct internet, phone, and office costs under IRS rules, as long as the space is used regularly and exclusively for that business.