How You Can Get In On the Home-Sharing Economy
A peek at the cottage industry, plus one man's home-sharing story
Survey after survey shows that Americans want to remain in their own homes as they get older; it’s called aging in place. Failing that, they’d like to live in someone else’s home — just not an institutional nursing home. Turns out, you may be able to make some money from this wish by launching a home-sharing operation or just renting out part of your own home.
Here’s the basic idea. Home-sharing programs — often managed by nonprofits — match older homeowners (sometimes empty nesters) who could use extra income with older local people looking for a reduced rent, usually in exchange for helping around the house. For instance, monthly apartment rents in Ann Arbor, Mich. average $1,300 to $1,400 a month, while the average home-share rent is $400 to $500, says Kim McKitrick-Thompson, head of the Housing Bureau for Seniors HomeShare Program in Ann Arbor, Mich.
Nearly 80 percent of Americans 65 and older are homeowners and many of these homes have empty rooms that could be rented out, so there are plenty of opportunities for such matches. (See the example at the end of this article.)
The Win-Win of Home Sharing
“The goal is to help someone stay in their home,” says McKitrick-Thompson. Adds Laura Fanucchi, associate executive director at HIP Housing, a home-sharing program in San Mateo County, Calif: “The homeowner may be house-rich and cash-poor, living on a fixed income. Renting out a room allows seniors to stay in their home and benefits the community.”
A home-share operation acts as a screening and matchmaking service, taking in applications from homeowners and renters (often called housemates). The staff interview applicants, look for compatible housemates, verify renter incomes, run background checks, provide lease agreements and offer support if problems emerge.
The homeowner pays a nominal fee for the arrangement and then keeps the rental income. For example, HomeShare Vermont charges homeowners a sliding-scale fee for a successful match, ranging from $60 if their annual income is less than $15,000 to $500 for incomes above $75,000.
The economics are compelling, but home sharing has mostly been a highly local niche program run by nonprofits. That may be changing, though.
Entrepreneurs See Profit Potential
Intriguing signs suggest this housing option is poised to expand, especially with socially conscious, for-profit entrepreneurs entering the business. Some even have national ambitions, offering the promise of expanding the size of the home-share market.
One home-sharing startup: six-month-old Silvernest, based in Boulder Colo., a for-profit currently targeting Denver homeowners age 50 to 75. Silvernest co-founder Chuck McKenney had been developing alternative housing options for Alzheimer’s patients and wondered: Why not make it easier for people to stay in their homes earlier? He teamed up with Wendi Burkhardt, who has more than 25 years’ experience in tech and is now Silvernest’s CEO.
“It’s a long-term version of Airbnb coupled with Match.com for the AARP generation,” laughs Burkhardt. (The typical Airbnb home-rental stay averages about a week in metropolitan areas, although the company offers a monthly sublet service in some markets.)
Silvernest, which has five employees, is pitching venture capitalists for $300,000 in seed money; it plans to raise another $3 million this year, with hopes of expanding to eight cities soon and going national in 2018. The service is currently free but plans to institute an upfront fee of $99 for three months. The renter application is $29.99. Tenants also get a rent-price break.
A big impediment to expanding the home-sharing market has been convincing older Americans to open their homes to strangers. “The whole business of sharing a home is very intimate,” says Annamarie Pluhar, author of Sharing Housing: A Guidebook for Finding and Keeping Good Housemates.
That reluctance may be changing, though, in a society where boomers are increasingly comfortable with home-sharing services like Airbnb.
Airbnb Meets Online Dating
Just ask Stephanie Heacox, 56, also of Boulder — the brains behind the new online nationwide home-sharing service, SeniorHomeshares.com.
Heacox spent much of her career in web development, but hit a rough patch after her mom passed away, her best friend suddenly died at 55 and the product Heacox was managing was sold. Then, she recalled a home-sharing idea she’d had when dealing with her mom’s health issues. So she took her severance and started two businesses, SeniorHomeshares.com and an executors-for-hire service, Orderly Estates. “This was the time,” she recalls.
Her for-profit business is reminiscent of online dating services, matching elders with more home than they need and others in search of safe, affordable housing. The service is currently free, with a little over 500 users. Heacox is experimenting with pricing and expects to charge one free month with a monthly subscription fee of $29.95. She’ll also offer a 14-day trial for $15.95.
The Money Advantages for Home Sharers
The financial advantages of home sharing are striking. Case in point: experienced home sharers and friends Karen Bush, a management consultant (she’s 68), and Louise Machinist, a retired clinical psychologist (she’s 69).
Back in 2004, Bush, Machinist and Jean McQuillin bought a large colonial home in Pittsburgh. (They wrote a book about their experience, My House Our House: Open House at Shadowlawn.) Last year, Bush and Machinist moved into a three-bedroom, two-bath condo in Sarasota, Fla. They remodeled the place to age in place in it.
“I wouldn’t be living here without Karen,” says Louise. “We are right on the bay and I couldn’t have afforded it.”
High on the list of advantages of home sharing is the positive impact on their personal finances. “It allowed us to save significantly more for retirement,” says Bush. “The quality of the home was higher and, at the same time, we got to save a ton of money toward retirement.”
The idea of communal living loomed large in the boomer popular culture in the 1960s, although relatively few people adopted the lifestyle then. Nearly 60 years later, boomers may well find that variations on communal living — including home sharing — are economically smart and socially rewarding.
If you’d like to learn more about home sharing, two excellent resources are: The website of The National Shared Housing Resource Center, which lists home-sharing agencies and A Vermonter’s Guide to Homesharing, which has the nuts and bolts of the arrangement.
What It’s Like to Share Your Home
Earl Roy, 81, lives in Ann Arbor, Mich. and has shared his home with several housemates over the past five years or so. “It has worked out for me,” he says.
Roy, a former civil engineer who spent most of his career building and maintaining supermarkets, wanted to stay in his home. His wife didn’t. So they separated and she moved into a small condo complex in town. But Roy couldn’t afford to keep his place without extra cash to pay for it. He turned to the area’s Seniors HomeShare Program to match him up with renters.
“I needed the income,” he says. “And I don’t really like living by myself.”
Sometimes, his housemates are students. Other times, they’re older adults searching for an affordable place to live.
He currently has two housemates: a semi-retired nurse, who’s been there for about a year, and a 38-year-old man working part-time at a supermarket who has been a tenant there for the past five months.
The downstairs level of Roy’s home is essentially an apartment with a bedroom, bathroom and other amenities. That’s where the nurse lives, paying Roy $500 a month. She has a table set up for her sewing projects and a small vegetable garden in the yard.
Upstairs are three bedrooms, one of which his male tenant rents for $450 a month. Roy and he share a bathroom.
Roy pays the gas and electric bills and his renters help with chores, such as mowing the lawn and shoveling snow.
“I’m glad to have people around that have to do things I don’t want to do anymore,” he chuckles.