How to Make Money From Your Home in Retirement

Many retirees decide to reduce their retirement bills by downsizing. Choosing to live in a smaller home can certainly save you money. However, a more spacious home might actually help you bring in some income during retirement. Here are some of the ways keeping a larger home can improve your retirement finances.

[See: 10 Ways to Reduce Your Housing Costs in Retirement.]

Rent out of room. Taking in occasional visitors can be a great way to meet new people and keep life interesting, while also making some income from each person who spends the night. New websites, such as Airbnb, make it easy to find prospective visitors.

Taking on short-term renters, who are usually on business trips or vacations, lets you set your own calendar. You can rent that extra room when it's convenient for you, but save the space for visiting family members or friends when they will be in town. And since you're charging a nightly, rather than a monthly, rate, you could bring in a lot more money.

Take on a tenant. You can create a new source of steady income in retirement if you rent out a room or rooms long term. You can use the space you already have to generate income, which can be used to offset many of your retirement expenses. Renting under a long-term lease gives you more consistency than a vacation rental.

If your property has the right setup, you could make even more by turning part of it into a separate apartment. This may involve some up-front costs, so you'll want to run a cost-benefit analysis before taking this option. If you're in a high-demand area for rentals, though, you could easily recoup your costs with your ability to charge higher rent.

[See: 10 Best Places to Retire on Less Than $100 a Day.]

Turn it into a vacation property. If you're only using your home for part of the year, consider converting your home into a vacation rental property. This can work especially well if you own a home in a warm weather area where you spend winters. You can have your own home throughout the winter, but then rent it at a premium for summertime vacationers.

Turning a home into a vacation property can be a time intensive project, since you won't be right there to manage the property or check out the renters. Your best bet here is likely to go with a full service rental manager. This will eat into your profits, but will let you earn cash from your home without huge headaches.

Rent out your storage spaces. Some people want to make extra money from their home, but don't want to share space with a stranger. If that's the case, consider renting out your garage or outdoor shed as storage space. This can be especially handy if parking is hard to come by in your neighborhood.

Renting a space in your garage is pretty easy through Craigslist or word of mouth. Check out what street and covered parking usually costs in your urban neighborhood, and shoot for similar pricing.

Another option would be to rent part of your garage or a shed in the back yard as storage space for a local. Young families are often overflowing with "stuff" they need to find space for. You could give them access to your storage space for a monthly fee.

[See: 50 Affordable Places to Buy a Retirement Home in 2016.]

Downsizing can be a great option for many retirees, but it's not automatically necessary. If you can figure out how to leverage the home you have to make some money, you may be able to stay there and earn enough to cover the higher housing costs. While it does take some work to find and vet renters and maintain a property through increased use, those who are willing to put in the work may be able to stay in the large home they love longer.

Abby Hayes is a freelance blogger and journalist who writes for the personal finance blog The Dough Roller, which covers topics ranging from credit scores and banking to how much money you should be saving.