Ready to 'Rent' Out Your Life Via the Sharing Economy? Here are five questions people commonly ask before diving in.
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Got a spare room or a second car? These things could help you earn extra income to ease that crippling household budget. And, considering the burgeoning number of different services out there in today's new "sharing economy," participating has become easier than ever.
"For the first time, consumers are able to monetize some of their assets that they already have that they weren't getting any income out of," says Rowan Benecke, chair of Burson-Marsteller's Global Technology Practice, based in New York. "Some assets could be the extra time [people] have available to run errands and do odd jobs; they could be an extra room in your apartment or a tool in your closet for a special project."
Technology has helped the on-demand marketplace grow. According to a survey conducted by Burson-Marsteller, 45 million Americans today are offering goods and services in the sharing economy used by 86.5 million Americans..
To make ends meet, the best way is usually to downsize, whether that means selling that second car or moving to a smaller home. But if you're not ready to do that, the sharing economy could help you bridge the gaps in your budget. "This is a way of making extra income and people are very eager to do this," says Jane Bryant Quinn, personal finance expert at AARP based in New York. "This is perfect for someone who doesn't work full time or is hoping for extra money on the side."
To get started, you have to become familiar with the different websites out there to figure out which ones work best for you. Whether you are driving or doing odd jobs to earn money, or renting your home or various possessions, these deals take work and effort; and you have to decide whether you're willing to put in the time needed for that effort. Interested? Here are answers to some of the frequently asked questions.
1. How can you earn money?
"[The sharing economy] is an opportunity to repurpose or monetize assets that you own, and buyers or renters are willing to pay you for the use of that," explains Benecke.
Driving for a taxi service like Uber or Lyft can be a perfect option to earn money for someone with a few extra hours a day. "[For] People who have retired early or have downsized and are living on social security and a little bit of savings, this is ideal because you can do something part-time, and don't need to put up a lot of capital, and work when you want," say Quinn.
Other services you can sign up for include boarding someone's pet (provided you love animals and know how to take care of them) and doing odd jobs. You can now advertise these services on the Internet: While the business model isn't new, how it's marketed is.
If you're renting your entire home or a room, that income can be significant depending on the location. Many tourists prefer staying in someone's house rather than a hotel. "You're providing the service, like a [bed and breakfast]; you can serve them a meal or not," says Quinn. "For individuals who are coming, it's cheaper than hotels and probably more comfortable."
Snow blowers, tools and second cars are all great items that you may not use regularly, but someone else may need. "People are renting all kinds of things," says Quinn. "It might be common in a community where one person puts up the money for a particular tool and rents it out to neighbors who need it."
2. How much can you make?
What you decide to rent, how often you decide to rent it and your price will affect how much you earn. If you're working odd jobs for $25 an hour, you'll earn much less than if you rented a room in a home with a desirable location," says Quinn. "The beauty of [the sharing economy] is that you can find these opportunities and work as little or as much as you want."
3. How often do you have to work?
"You have the flexibility to participate in the sharing economy at your own priority and initiative," says Benecke. If you're doing odd jobs or driving, you can set your own schedule and work as many hours as you want. "People who participate in the sharing economy do so as an independent contractor and they have more flexibility," he says. "You have the opportunity to dip in and out, to participate as much as you want and to determine your own price."
4. Are there safety concerns?
Liability is always a concern. If someone gets in an accident with your car, if you're renting part of your home as a storage space and fire breaks out or if someone rents your room and slips on your floor, you may be sued or have to replace someone's items.
Many companies within the sharing economy offer insurance, but you need to call your own provider first to explain what you're doing. At a minimum, work with your insurance provider to make sure it will cover you.
There's also an issue of safety whenever someone comes into your home. Once he or she contacts you to arrange a rental, obtain a name, address and credit card info.
5. Do my reviews matter?
There's a lot of transparency in the sharing economy. "The marketplaces are generally peer-to-peer markets, where you can determine other people's experiences with you," says Benecke. "If you're renting a particular service, a community can rate a particular service. Users rate providers, and users are rated by buyers."
Finding out about people within the community is easy, and people are more inclined to trust someone with an established service and good reviews.