3. Get that real estate dough
Too broke to buy a home instead of renting? If you live in a desirable location, your apartment, condo or home could still be your golden ticket — especially if you have other places to crash: While renting out your space through Airbnb can help anyone make some extra income, those living in destination cities like San Francisco, Chicago and New York can really clean up.
For instance, New York City hosts can charge an average of about $100 per night for a private bedroom, Business Insider reported. Subtract the 3% Airbnb host fee and you net $97 per night. No, of course you aren’t going to rent out your pad for the 28 years it would take to reach $1 million — but any amount of time that you can will add up. If you rented your space for the equivalent of one year, you’d be more than $35,000 closer to your goal.
Among other things, that’s money you could put toward a downpayment on a home you own. Indeed, being a savvy real estate investor can get you to $1 million, at least if you do your homework and don’t try to beat the market, Skylar Olsen, senior managing economist for Zillow, said in a phone interview.
Instead of purchasing distressed properties and flipping them for a profit, Olsen said investing in outlying areas — just outside the hippest, coolest neighborhoods — is the smarter way to make bank.
“Check out neighborhoods in areas adjacent to the city center, because they often tend to gain value much more quickly than homes in the city center,” Olsen said. Zillow calls this the “halo effect,” because after a few years these homes will pull up the values of homes in surrounding neighborhoods.
How can you cash in on your property? Patience — and a great location — is key. Nationally, those who sold a home in 2016 got 24% more than what they paid after living there for less than eight years, according to Zillow. Owners in Oakland, considered a sought-after city, sold their home for an average $590,000 in 2016 after living in it for just over seven years — a 78% gain.
Finally, you might consider renting out property to make money, as well. For instance, if you put down 20% on a property worth $100,000 and charged $750 in monthly rent (with $500 going toward covering your mortgages and taxes), you’d end up with $250 a month in pure profit.
At the end of the year, you’ll have an extra $3,000 — which you can start saving for another down payment for your next rental property.