When I hear the word “sharing” I immediately think of my childhood, when I first learned that it was “nice” to share (thanks, Mom). I also think of sayings like sharing is caring, everybody do your share, and all the other sharing slogans that kids learn. Then I come to my senses and remember the new, technological forms of sharing, like social media and P2P file sharing networks. The term “sharing” has come a long way, and it’s continuing to change as we now find ourselves in the sharing economy. I know my mom still thinks sharing is nice, but I wonder if she knows that you can make money in the sharing economy. We’ll show you three easy ways to do it.
What is the sharing economy?
The sharing economy is a movement where individuals use the goods and services of other individuals. Doing so can often lead to lower prices and more convenience. Imagine that you need to travel out of town for the weekend but your car is in the shop. Rental cars are out of your price range and you feel like you’re out of options.
Then, you hear that someone just a few blocks away from you is renting out his car for the weekend because he’s flying out of town for business. His price is much cheaper than the rental car place, and it’s a nice car. You save money on renting a car; he makes money on the car he can’t use this weekend anyway. This is what the sharing economy is all about.
Making money in the sharing economy
So how can you make money in the sharing economy? Check out these ideas and see if one works for you. Before you decide to move forward, be sure to do your own thorough research.
Rent out a room
If you have a spare bedroom or live in an exotic or touristy location, this could be a good way to generate extra income. The sharing economy has led to a new trend: people are renting rooms from individuals instead of staying in traditional hotels.
You can rent out room(s) in your home or list a whole property if you have second home. Use a site like roomorama to post your details, pictures, and the price per night.
Rent Out Your Car
Like we mentioned above, renting out your car when you don’t need it is the perfect example of what the sharing economy is all about. But there is a catch. Car insurance companies aren’t sold on the idea, yet. If you live in California, Oregon, or Washington, you’ve been given the green light for car sharing. Those three states have passed laws, with the help of insurance companies, to recognize car sharing and prevent policy holders from being punished for participating. Two popular car sharing companies that have caught the sharing economy by storm are Getaround and Relay Rides.
If you’re not in these states, it’s probably a good idea to hold off until the laws change. You certainly don’t want your insurance company to cancel your policy. Once it is recognized, renting out your car could be a good way to bring in extra money, maybe even enough to cover your monthly payment. This could also end up being a better deal than Zipcar and other similar services we discussed here: Could you live without a car?
Make a Loan
If you have an emergency fund set aside, are making contributions to your retirement plan(s), and have steady income, you might be a good candidate for another new product of the sharing economy—peer to peer lending. Micro lending hit the scene several years ago, allowing people to invest in small startups in developing countries.
This idea is now a hot trend domestically. You can make a small personal loan through a reputable site like Lending Club and collect interest from the borrower. The borrowers go through a rigorous approval process with Lending Club—90 percent of applicants are denied, and the average borrower has a credit score of 706.
To keep risk low, you can diversify and fund small portions of different loans. You can also invest in low interest loans, which will be offered to safer borrowers. Lending Club ranks risk (and interest) on a letter grade scale. Grade A loans earn between six and nine percent. Grade G loans earn between 25 and 27 percent but are much riskier.
The biggest perk here is that you may be able to earn 6% or higher in interest. Considering that the average interest rate for a U.S. savings account is under 1%, this could be a good deal for you. Lenders are only charged a 1% annual fee for this service.
How will you share?
Sharing is a good thing. We learned that lesson a long time ago. And in today’s changing world, the sharing economy can be “nice” in a different way. So go ahead, follow Mom’s advice and share away. If you do it right, you can make money in the process.
How will you make money in the sharing economy?