Rent or mortgage payments tend to be the biggest monthly expenses we face, but one savvy homeowner found a way to turn her house payments into a steady source of passive income.
What To Know: CNBC contributor Precious Price built a luxury tiny home in her backyard for around $35,000 so she could free up her main house for rentals. Now she essentially gets paid to live out back.
"As I stared out the kitchen window into my huge backyard, something clicked: I could use that space to build a tiny home to live in, and fully rent out the main house," Price wrote.
In 2019, Price bought a 1,400-square-foot house in Georgia for just under $200,000. She got started by listing spare rooms on Airbnb Inc (NASDAQ: ABNB) to generate extra income, but when the pandemic hit, the amount of people looking to share living quarters dried up.
That's when she got the idea to build the tiny home in her backyard. She actually purchased a shed and hired contractors to build it out into a home, which helped to simplify the process. She paid off the entire cost of the build in less than two years.
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Price considers the 296-square-foot backyard house a "luxury tiny home" and she's profiting from the project. She spends $1,580 per month on her mortgage, property taxes and utility bills, but she’s able to generate $2,725 per month by renting out the main house. That leaves her with close to $1,150 profit on a monthly basis, which means she's essentially getting paid close to $14,000 a year to live in her own backyard.
There are some drawbacks. She's had to downsize her wardrobe and cut back on hosting get-togethers, but it's well worth it, she says. She's even planning to add a guest suite to the main home to be able to offer more rental options.
"It’s amazing what you can do with a bit of backyard space," Price wrote.
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This story is part of a new series of features on the subject of success, Benzinga Inspire. Some elements of this story were previously reported by Benzinga and it has been updated.
Image created with ChatGPT.
