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Side Hustle Series: I’m a Live-in Landlord

by J. Money on Wednesday, November 17, 2010

room for rent
By Mike Choi

Whether it’s doing freelance graphic design or doing handyman work around the house, we all have some kind of assets that can be put forth to make some extra cash.   J. Money defines making money from side projects as hustles.

One of my hustles that I’ve been doing for the past 5 years in addition to my 9 to 5 job is renting out my spare bedroom.  This really isn’t a skill, it’s more like an asset that is not being utilized to its fullest potential.  So why not take full advantage of it and cash it in?

How Did It All Start?

It all started about 5 years ago when I wanted to go to graduate school when I didn’t have any wiggle room in my budget for tuition.  The most obvious choice was to take out student loads.  However, I didn’t want to take out student loans because I already had loans from my undergraduate studies.

I needed a way to make cash on the side without spending too time on it because anyone that has pursued a degree knows that school work consumes a fair fit of time.  Although, drug dealing for profit or operating a ponzi scheme would fit the bill as a money making scheme, it is however, highly illegal.  After some thought, the next best option was to rent out my spare room.

The First Few Months

I started by placing advertisements online looking for a roommate that would rent my spare bedroom.  It didn’t take too long before I found a suitable roommate who was around the same age as I was, and held a professional job.  Now, I’m a seasoned traveler and stayed at numerous hostels (a place to sleep with share common areas) across the globe, so having a person who I didn’t know move in didn’t make me too uncomfortable.

In the first six months, I made $3,600 bucks.  Considering the amount of time I put in this endeavor, this was a nice little chunk of change that paid for the first several classes of graduate school, but it was just the stepping stone.

Pimpin’ My Budget

The rental income from one roommate didn’t pimp my budget enough to pay for two graduate classes per semester (one class costs $1,600 bucks).  I needed to turbo charge my rental income so that I could afford to pay for two classes a semester and graduate in a reasonable amount of time.

At that point, things were working well with my first roommate; I figured I could get another roommate.  I renovated the basement by buying material and such on a zero percent credit card.  After finishing the basement, I moved in there and found a roommate for the bedroom I was currently living in.  Once the second roommate moved in, my budget was officially pimpin’ – I had enough cash to pay for two graduate classes per semester and then some.

Actionable Steps

As J. Money put in his post, think about the actionable steps so that if the need ever arises you have a plan to execute.  In my case, I did just that.  I knew the steps it took to rent out a room – place advertisement for roommate, select roommate, and collect rental income. (it’s a little more detailed than that, but you get the basic idea).  The key part was executing the actionable steps when I needed the extra flow.  Of course, there was some refinement to the steps.  But once I got the ball rolling, I started slow by renting out only one room then learned the ropes of the business and process.  I then expanded my operation by renting out another bedroom.

This hustle has allowed me to pay for graduate school without borrowing a single penny as of 2009. I still continue to rent out my spare bedroom because I’ve discovered it’s a great way to make some extra cash without too much of a time commitment.  Since I graduated with my graduate degree, I no longer have tuition to pay for, now instead, I’m using the rental income to pay off my underwater mortgage debt.

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Mike blogs over at Renting Out Rooms, and tweets @mchoi9 – click over and say hello!

And if you’d like to be featured in our Side Hustle Series, give me a shout and let me know what you’re up to! (j @ budgetsaresexy dot com)


{ 7 comments… read them below or add one }

1 Leah November 17, 2010 at 8:47 am

Great Hustle!
THIS is the living plan I hope my sons will adopt when they start college. Instead of paying those OUTRAGEOUS dormitory fees, I’d rather give them a down payment on a home to live in and rent out to cover the mortgage and insurance…

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2 Kevin @ Thousandaire.com November 17, 2010 at 9:13 am

I used roommates all through college to ensure I never paid more than $300 in rent a month. Now I pay $850 a month in rent and would never go back to roommates unless it was my best friend. Congrats on being able to deal with a stranger in your house. I did it for years in college and could never do it again.

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3 StackingCash November 17, 2010 at 10:07 am

Is J. Money going to rent out his house and get an apartment closer to work? Hmmm…

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4 MKG November 17, 2010 at 12:02 pm

Do you have any horror stories about any of the roommates you have had thus far? Roommates do not work for me.

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5 too funny November 17, 2010 at 1:07 pm

Love the phrase “side hustle.”

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6 Briana @ GBR November 17, 2010 at 6:52 pm

This sounds great, but I don’t think I could do it. I would love to do a rental property but living with strangers would throw me off lol

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7 J. Money November 19, 2010 at 12:57 am

@Leah – I woulda LOVED it if my parents did that! Although no way I’d want to live there all those years if it’s bought… plus, you know how rowdy college kids get. probably not yours though ;)
@Kevin @ Thousandaire.com – I miss roommates sometimes… the money part was nice, but the party planning/hanging out was even better! Of course, now w/ the wife *other* parts are better ;) ow ow!
@StackingCash – Sources say…. Very Probable!
@MKG – I, J. Money, had a bad one in College before but not sure if Mike, author of this article, has? I’m sure he has, and hopefully he’ll share with us when he reads this! :) I’ll have to share mine later…. too long to write out now.
@too funny – Thx dude. Hope you’re saving a cple beers for me! Hoping to get together as soon as things calm down a bit.
@Briana @ GBR – They usually become your best friend, or your enemy ;)

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