During times like these, when some people aren’t sure when their next paycheck will come or whether they can afford rent this month, people are looking for ways to make some extra money.
Aside from selling off assets like Michael Jackson, there are a surprising number of creative solutions to ease the pain of your bankroll. One of which is called Homestead.
Homestead was funded by Y Combinator during their winter 2020 round and offers a way to help people turn their garage into a rental unit, with no up-front costs.
How does it work?
An Accessory Dwelling Unit or ADU is usually a guest house or garage and sometimes detached from your home. Establishing an ADU within your home requires garage inspections, power line clearances, permits, and a hell of a lot more before you can start renting it out.
Homestead takes care of this entire process for you. Not only will they take care of the inspections, but they’ll help you design your ADU and take care of the repairs and maintenance after it’s done.
The construction and permit process takes 8-to-12 weeks and then Homestead helps you find qualified renters. After the process is complete, the company will start sending you checks every month even if you don’t have a tenant.
Homestead estimates that this entire process can increase the value of your home by $158,000.
At this point, you might be asking yourself “What am I supposed to do with all the sh*t in my garage?” Well, Homestead has an answer for that. The startup says they normally build a storage unit next to your new ADU but they can also arrange other self-storage options.
How does Homestead make money?
Since the startup does almost everything for you, they take a percentage of the rent from you. But a good portion of the money Homestead “makes” technically comes from the savings they get from constructing many ADUs at once.
Renting out a spare room in your house has become a relatively common practice. Craiglist, Zillow, and Apartments.com all have options if you’re interested in doing this kind of thing. However, not everyone wants a stranger living inside their actual house. For those with kids, it can be a huge risk.
Although a garage isn’t necessarily a drastic difference, it still provides a little more separation from your actual living space.
If you’re someone that could use a little extra money, which is nearly everyone in America, then this might be an option that’s worth looking into.
Since Homestead has primarily operated in Los Angeles, I’m curious how the costs would change in areas like the midwest where you’d need heated garages in the winter thus lowering the rentee’s profit margins.
Regardless, I’d imagine that anyone that can turn a garage into a rentable unit that yields a monthly check would be able to benefit from a startup like this.