Rent or mortgage payments swallow up between 25 – 35% of a person’s or family’s income. That’s a huge chunk of dough, especially for a renter whose rent money is gone forever. In contrast, at least a home owner has the potential to earn some of that income back when they sell their home. But does that mean renters get the short end of the stick and will forever be financially inferior to a home owner? According to Suze Orman, not necessarily; it’s what you do with your extra income that matters.
Suze Orman’s response to the caller’s question got me thinking, “What if you could live rent-free?” That would definitely be superior to mortgage payments – take that 25% or more of your income that would generally be applied to rent/mortgage, and invest that money in something else. (I personally like mutual funds, but to each his own.)
Researching this topic lead me to few ideas that seemed viable. Sure, I could house-sit (a frequent rent-free solution that kept popping up), but then where would all my stuff go? House sitting might work out great for a 20-something without many possessions, but the nomadic lifestyle just isn’t for me. I think it would also be a little uncomfortable feeling “at home” in someone else’s home.
Another popular rent-free idea is to become a barter roommate. Receive a room rent-free for services such as cleaning, lawn care or elderly care. Again, someone with few possessions and single might like this idea for a little while giving them time to save money.
Living in an RV or houseboat might be a solution that makes a little more sense. Actually, I visited some people living in an RV recently and they recommended we do the same while saving up money to buy property. They absolutely love their RV and even when they go home (to an actual house) they continue living in the RV while renting out their house. Some RV’s are quite large with ample storage space below the living space, but it’s not for everyone – and not for me right now.
The best idea I found for rent-free living was to become an onsite apartment manager. You get the best of both worlds – your own apartment and free rent. Of course, there’s some work involved like showing apartments, submitting paperwork, dealing with tenants and handling maintenance issues, but depending on the size of the building, it’s not a bad gig. Depending on the building, managers may be required to hold a realtor’s license or have specific handyman skills, but it’s definitely worth looking into for the right person or couple.
Though rent-free living might not be in my immediate future, it’s something I often think about – finding solutions to reduce that 35%.
Have you lived rent-free? Do you pay less than 35% for rent/mortgage? How do you do it?