Last November, our furnace went out. It wasn’t a good time for that to happen. The weather had just started to get cold and my sister-in-law was staying at our house for the month with her newborn baby and a 3-year-old child. Needless to say, not having heat for even a day wasn’t very convenient for us.
With temperatures low enough where we could see our breaths, we ended up having to call an emergency repair person to come fix the furnace. Just to have the guy come to our house cost us $200 (furnace repair places must make a killing in those first weeks of winter).
After examining our furnace, the guy told us that the furnace could be repaired later that week. All he needed to do was to rush order some parts and he could come back in a day or two to begin the repair. He estimated that the cost of the parts and repairs would be a few hundred bucks. When it was all said and done, we got our heat working. But, it wasn’t cheap.
For many people, a situation like this could be problematic. There are tons of studies out there that show that most people can’t handle even a $400 or $500 unexpected expense. While most readers of this blog are probably a little bit more ahead of the game than that, even unexpected housing expenses like the one we faced could be a problem. At a minimum, stuff like that can throw you off your financial game.
Thankfully, for my wife and I, an expense like this wasn’t a big deal. We rent out a spare room on Airbnb, and since we’ve never needed our Airbnb money, we decided to set it aside specifically to handle home repairs. When the bill came due, all I had to do was reach into our home maintenance fund and pay the bill.
I’m a huge fan of Airbnb just because it can be a way to monetize your unused space and make your space more efficient. But Airbnb can do a lot more than just that.
Depending on what you do with the money, it can be the perfect way to create your own home maintenance fund. If you’re a homeowner, you need a home maintenance fund. So why not have Airbnb fund it for you?
Your Home Costs Money
Houses cost money – that’s just a fact. If you own a house, you should have money set aside to handle both expected and unexpected maintenance and repairs.
In the 7 years that we’ve owned our house, we’ve been lucky to avoid any major catastrophes. We’ve only had some minor repairs over the years, such as:
- Reinsulating our attic. We did this ourselves and it cost us about $500 or $600.
- Replacing our dryer. Our old dryer that came with the house stopped working and we spent $600 to get a new one.
- Replacing our screen door. This cost about $200 to buy the screen door. My wife installed it herself (she’s the handy one in our relationship).
- Waterproofing our basement. We had some major leaks in our basement, and my wife dug up the side of our house where the leak was coming from and threw in some gravel and other stuff to help move water away from our house. It fixed the leak problem.
- Fixing our furnace. As mentioned, we had to pay a few hundred bucks to repair the furnace, plus $200 just to have the repairman come to our house to look at it.
Even without any major catastrophes, we’ve spent a few thousand dollars on repairs over the years. If you’re a homeowner, you probably have similar expenses too. Now you can see why you need money set aside for these types of expenses.
How Much Should You Save For A Home Maintenance Fund?
So how do you figure out how much you need to save for home repairs? Like all things dealing with money, there’s no right answer. Instead, we turn to general rules of thumb that can be helpful.
Typically, you can calculate how much you need to save for a home repair fund in two ways:
- Save 1% of the cost of your house each year; or
- Save $1 for every square foot of house you own.
So, as an example, our house cost us a grand total of $236,000. Our square footage is 1,970 square feet.
- Under the first method, we’d need to save 1% of $236,000 (or $2,360 per year) for home maintenance costs.
- Under the second method, we’d need to save $1,970 per year ($1 for every square foot of our house).
Obviously, this doesn’t mean that we spend exactly those amounts every year. Some years you might spend more. Other years, you might spend less. The idea is that by saving some reasonable amount, you’ll have money set aside whenever those home repairs do strike. In the end, you just need to pick some number and save it away for house emergencies. Worst case scenario – you end up with too much money and use it for something else.
For my own situation, $2,400 per year has always sounded like a decent number. Assuming only small things come up, we’d have enough to cover major expenses down the line – things like a broken water heater, new furnace, new roof, etc.
For you, your number might be higher or lower. All that matters is to pick a decent number and stick with it. And most importantly, figure out a way to fund that home maintenance fund.
Using Airbnb To Create Your Own Home Maintenance Fund
Most people will fund their home maintenance fund using their own, regular working income. That’s a logical thing to do. If you can afford it, of course, you should save money away.
Admittedly, I don’t budget well, but I do save money well. And one of the easiest ways to save money is by saving away money that you normally wouldn’t have. For my wife and I, that’s our Airbnb money.
Here’s what I mean. My wife and I don’t use our Airbnb money for anything. It’s completely extra money to us – we both live perfectly fine on our current income, so any money we earn from Airbnb is just an unexpected bonus.
If you think about it, if you’re not renting out your guest room on Airbnb, that means that every dollar you make from that room would be money that you 100% do not need. Imagine what you could do with it? My advice – use that money and partially fund or even fully fund your home maintenance fund.
Take my example. $2,400 per year in a house maintenance fund is a pretty decent sum – probably enough to cover a lot of home repairs in any given year. All you need to do to make $2,400 in a year is earn $200 per month. That’s it!
So what’s it look like to make $200 per month from Airbnb?
The answer – it’s not very hard. I think almost anyone living in the US can bring in about $50 per night from a spare room in their house. That’s pretty much the base price for my own Airbnb room, which is in an old house with not a lot of amenities.
Thus, bringing in $200 per month from Airbnb requires just four nights of someone staying in your house on Airbnb. Four nights! That’s it! Even if you hate people, you probably can handle having someone in your house for four nights in a month. Who knows, you might even end up like me and find that you like hosting and meeting new and interesting people.
It’s not a ton of work and in the end, you get a nice little house maintenance fund without having to impact your regular income at all.
Earn Extra Income And Avoid Life’s Surprises
You can budget and save all you want, but in the end, I’ve always thought the easier way to save money was to earn extra money and then save it away. The great thing is that, with the rise of the sharing economy, we’re at a point in history where anyone, pretty much anywhere, can earn extra income without a ton of work and without a lot of upfront time or cost.
We all need money for life’s surprises. And your home will come with those surprises – I guarantee that. A measly few hundred dollars a month can be life-changing.
Would the furnace have destroyed us? No, I have money in an emergency fund and I have money saved for other things. I would have been fine even without the home maintenance fund that I funded using Airbnb. But, it took so much pressure off knowing that I had that money there. And that’s just me. For a lot of people out there, a broken furnace could completely throw you off your game.
Hosting on Airbnb has not only been fun for me – it’s been lucrative too. No, I won’t become a millionaire just from renting out a room on Airbnb. But it’s pretty crazy to think that I can fully fund my home repairs just from hosting guests for a few nights a month. And the key to remember is that this is something you can probably do too – if you wanted to.
For you readers, what do you think? Would you be willing to host guests on Airbnb for a few nights per month in order to fully cover your home repair expenses?