How to make money in the sharing economy
In 1791, Alexander Hamilton, the Secretary of the Treasury for USA asked people to quantify the moneymaking capacities of their farmlands, workshops and families to gather data on the economic indicators for his famous ‘Report on Manufacturers’. Unfortunately, people back then were not sold on the idea of putting a dollar value to their possessions and Alexander received very few replies.
Since then, things have changed. Time is equated with money and cities are teeming with people who stay up in pursuits of increasing the $ value of their time. With increasing material needs such as a house, a car, good education, annual travels and well-being of children; people have figured out that a single source of income is not enough and have actively turned to passive income streams. The age-old methods of passive income such as investing in stock market for dividends, renting a spare rental property or investing in a business, come with a barrier to entry in terms of money and require strong research to back the investments.
Within the last two decades, the terms ‘gig-economy’, ‘freelancing’ and ‘sharing economy’ have become a part of the millennial lingo. People have found innovative ways to increase their passive income by utilizing their skills or their existing assets. For example, Fiverr, an online marketplace for freelancers, provides services ranging from graphic designing to App development. The platform has 14 Million users and is a publicly listed company on NYSE. Some people have reported annual earnings between $10,000 to $20,000. The gig economy is expected to reach a market size of $455B by 2023.
The rise of gig-economy and a thirst for side-hustles has ushered in the age of sharing economy
To define it broadly, the sharing economy consists of marketplaces where users engage in peer-to-peer activities of acquiring, providing or sharing access to goods and services. The main idea of the sharing economy is to derive value (the much needed $ figure) from sharing underutilized or unused personal assets between two or more parties.
There are hundreds of firms which are utilizing this business model. Look at your mobile apps and you will see the trusty Grab or Gojek for ride-sharing; Airbnb for accommodation; Drive lah for car sharing. Today, there are hundreds of apps where you can share your possessions for a quick buck or rent cars, apartments or clothes from someone around you without the expense of owning it.
Now that we are all part of this economy and have assets that are underutilized, how do we earn money from them? Step 1: look around your house and outside the house to make a list of what you own and what you are willing to share and let’s figure out a way to make money.
Spare Rooms or Apartments
If you have a large house with spare rooms or an additional apartment, you can upload a listing on Airbnb to rent them for short periods. Travelers have taken to Airbnb like bees to honey. Airbnb is 30-40% cheaper than traditional hotels, more convenient as you can cook and have access to all amenities of the house and easily extend your period of stay.
According to a report on CNBC, Airbnb hosts make an average of $924/month
While this will differ depending on the property, it should give you can idea of what you can earn. Having a side income of almost $12,000 a year doesn’t sound bad! There are multiple platforms which you can use other than Airbnb such as Homeaway, VRBO, Homestay etc.
Your Car (Or Cars)
For long, cars have been a status symbol in society, but they are also the most under-utilized asset. A Fortune.com article states that cars are idle for 95% of the time and if we evaluate our utilization, we will find out that it’s true. Car ownership is a pricey decision as there is a huge upfront cost and then recurring annual costs. For example, a basic Honda Vezel costs around $90,000 in Singapore while the recurring costs are around $17,000/year.
Given these costs, car-sharing is a great way to recover some of the costs. For example, on Drive lah, users earn an average of $450/month (almost $6,000 annually) for renting out their cars. The extent of earnings depends on the location, car and pricing.
A 22-year-old Drive lah host from Sengkang Singapore, who came on board in January 2020 has earned over $8,000 by renting out his car
For renters, Drive Lah also offers great value; you can rent a car for 24 hours at only $50. Car-sharing helps hosts monetize an underutilized car and renters can enjoy convenience of a car without the hassle of ownership.
So, it’s time to look at your car and find platforms where you can opt for car sharing. Around the world there are many platforms such as Turo, Getaround and Carnextdoor. Here in Singapore, there is one truly Singaporean version called Drive lah.
Share your Skills
Are you an expert at logo designing? Know how to crack interviews? Have a great voice for doing voice-overs? Can you teach science? Then platforms like Fiverr, Reedsy, Upwork and TaskRabbit help you share your skills for fees. You can do tasks from mowing someone’s lawn for $5 to editing someone’s book at your convenience for $400. People have successfully turned into freelancers using these sites and are earning more than their corporate salaries.
Lend your Money
Peer-to-Peer lending platforms such as Lending Club, Mintrest, LendenClub etc. have become mainstream by providing financial access to the under-served. On these platforms, you can invest in various loans and gain interest on the repayments. The investments can be as little as $50 to sponsoring an entire loan. While there are risks of default in lending to strangers, the interest rates are quite lucrative, within the range of 10-30% and one can invest according to one’s risk appetite. Simply investing $10,000 in loan with 20% interest rate will return $12,215 over 2 years.
An ideal way to share your wealth and grow it!
Beyond the ones mentioned above, there many ways to make money in today’s economy. Are you a dog-person? Sign up on Rover and board a dog for someone who is traveling.
Have a driveway but no car? Have an empty garage? Share the storage space with people who need on Neighbor. Rent your driveway for people to park and mint money on Pavemint platform.
If you don’t want to share, then drive your car for Go-Jek or Grab. Look back at your list and you will surely find a platform to share what you have!
These are some of the common ways you can make money from your assets and skills. When it comes to the sharing economy, you can basically rent out anything and everything you own. Imagine making annually $20K-30K by renting out a spare room, your car and driveway. Isn’t that a nifty amount to spend on a lovely vacation?
The sharing economy boom is powered by the principle of ‘access over ownership’ and the focus on fundamentals of sustainability and reduction of under-utilized assets.
According to an Nature.com article, bicycle sharing reduced carbon dioxide (CO2) and nitrogen oxide (NOX) emissions by 25,000 tonnes and 64 tonnes in 2016, respectively in Shanghai. For every 10 cars that are active on car-sharing platform, one car is taken off the streets. The emergence of Airbnb has significantly impacted the growth of traditional and under-utilized hotels.
Governments around the world are supporting car-sharing firms in order to reduce congestion and carbon footprint
The use of peer-to-peer lending platforms has brought access to finance for the under-served. The sharing economy has brought more within reach for less resources. With people focusing more on experiences and owning less, the sharing economy will only keep growing.
The sharing economy has unleashed an enormous earning potential on all under-utilized asset. Look at the ToughNickel’s blog for a list of ‘Unusual Things You Can Rent or Lease’ and get a laugh (or maybe some ideas out of it).