Generate More Cash Flow from your Home

Generate More Cash Flow from your Home

Posted 2013-09-06 by Justine Crowleyfollow
A spare room in the home for some, can turn into some serious extra cash.

Dedicated to those readers who currently own their own home, that is as owner occupiers predominantly. Even if you're renting your current home, there is a clever way that will be covered, to help you generate more cash flow. Many people can do with some extra cash. For many owner occupiers, your home is generally going up in value, depending on the time you purchased your principal place of residence; yet there are about four different sources of income derived from the home. Maybe five if you work from home in your profession. Please note, this article is not a substitute for financial and/or accounting advice, and hence does not take your personal financial circumstances into account. Please only treat this as a guide, and seek professional advice where appropriate.

1. Renting out a spare room

Many people, regardless as to whether or not they own their own home (with or without a mortgage attached) may have a spare room to rent out for some extra cash, whether it is renting out to exchange students, or on a lease arrangement as in shared accommodation. Otherwise, for something more shorter term, many people do (indeed) turn their home and/or room into some extra cash through sources such as Airbnb . I believe this company also come to your home, take the photos, and list your home on your behalf, while they take a small commission in doing so. It's popular, and people have done well with this source, even in renting out their entire home while on holidays.

Your home is more valuable than you might be led to believe

2. Renovate

From a lick of paint to something cosmetic, renovating your home is perfect prior to moving out and renting it out, and also (again) to add more value in terms of capital growth, which is extra equity you can use to borrow against another house to rent out, and hence generate multiple sources of income on that house, and more in the cash flow form as well. In the case of renting out the renovated home post-renovations, your home is more valuable to tenants, and you can therefore ask for more rent without the need to be greedy either.

A lick of paint indeed

3. Refinance your home loan

One of the best decisions yours truly made earlier this year. Banks are lending again, and even if you're self employed, you can still find a way to obtain a full-doc loan that saves you interest, provided you're willing to work with your lender and also play their game conversely to everyones benefit. There is a new line of credit facility around (you need an LVR of at least 80% to qualify, with good financials) where you can have up to 10 sub-accounts, with a combination of fixed and variable interest rates, with your current home (if owner occupier) serving as your primary sub-account. Greater re-payment flexibility is enjoyed here, as well as an attractive interest rate. Although the fees are higher, as this is a new generation, unconventional type of home loan; bear in mind that these fees put more cash back in your pocket as they include loan establishment fees, discounts, and no annual fees when you package other financial products with the same lender into this loan, such as insurances, credit cards and transaction accounts. The secondary sub-accounts are designed for other houses and investments, without any cross collateral involved.

With these new loans, read the fine print carefully, and play your cards right.

4. Tax benefits

When renting out your room (if you decide to not rent out your own home entirely), doing so also provides reasonable tax deductions that maximises your cash flow come tax time. You can claim a percentage of your body corporate, bank interest and council rates to name, provided you're declaring the extra rental income derived from renting out your spare room.

Although an unexpected expense, special levies for strata titled units, apartments and townhouses can add value, and can provide extra cash flow from such homes.

5. Depreciation

Phantom cash flow indeed. If you own your own home, and you are not renting out your room/s to anyone, and your home is in a company or trust structure, you can claim depreciation on your home despite living in it. You can definitely claim this form of cash flow for natural wear and tear on buildings and assets as a landlord regardless. Ensure that you're using the services of a fully qualified Quantity Surveyor, and use a company that will amend your Tax Depreciation Schedule free of charge, should you decide to replace any existing assets, provide furniture to your tenants for extra cash flow on both ends in the home, and/or if you renovate your particular home. Depreciator is a nationwide company that amends existing schedules free of charge, and even having to amend an existing schedule two years ago due to the Hot Water Service blowing up on one of my properties, they amended my schedule at warp speed.

The cover page of a Tax Depeciation Schedule

If you have any other creative ways of generating more cash flow in your home, like a friend of mine who held a casino party recently, finding a few notes after cleaning up, to renting your home out for a film screening, then please share your experiences for all readers of Home Genius to benefit.



241884 - 2023-07-18 05:27:56


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