Supplemental Income in the Share Economy: Your Assets on the Sideline

Clipping coupons? Bottle returns? What’s your thrifty part-time obsession? I first discovered my frugal habit in September 2009 when I bought my first house. Home values continued to deteriorate in a post-crisis real estate meltdown, and renting out bedrooms to friends was a great way to help with the mortgage. At the time, I called it necessary income, but I realized supplemental income was a way to create sustainability within a household’s balance sheet. Rather than holding a nonperforming asset and sunken expense, I sacrificed my privacy and put the asset to work.

Supplemental income is not a new tactic. In the 90s, my uncle rented his rooms to his own friends, and my family paid to stay in someone else’s vacation home in Sunriver. There was a network that effectively marketed properties to renters and produced income for the owner.

In today’s world, connectivity has irrefutably expanded and the economy continues to leverage new internet discoveries. Whether it’s staying in touch with old friends, free two-day shipping on Prime or tracking your Uber driver’s location while standing outside the theater, the internet has helped improve lives. As these networks grow, we discover new avenues to explore and how they can further meet consumer needs.

Most of us have participated in the share economy by staying in an Airbnb or riding with Uber. The market is developed, widely utilized and ready to empower individuals through income opportunities. Do you have a boat or RV that gets four weeks of use a year, remaining dormant the rest of the time? Do you pay to heat and clean a guest room that only gets one visitor per year? Or better yet, can you provide a highly-sought after accommodation, like a daylight basement with a separate entrance located five minutes from downtown?

People can rent entire homes, apartments, tiny houses, private rooms, cars, trucks and boats. The opportunities seem endless now that the share economy has decentralized distribution. At the same time, ownership becomes less enticing as the cost to purchase, insure and maintain these items continues to increase.

Whether you’re a consumer or plan to generate supplemental income through the share economy, market needs are being met and it may be time to reassess your own assets that are sitting on the sideline.

Are you dreaming of early retirement or stretching your 401(k)? Supplemental income is one way to take a step closer to this goal. Before I considered generating income from the share economy, I made sure to use the services and understand how they work, while learning the consumer’s expectations.

You may discover that you do not want strangers wandering around your property after you use Airbnb for a vacation. However, you may attain a sense of happiness knowing you stayed at a beautiful property for 80 percent of the price of a nearby Motel 6.

How is this newfound cash flow impacting savings? Let’s assume you can generate an extra $1,000 per month from your entrepreneurial spirit in the share economy. Depending on your income level and retirement needs, this could be enough savings to fund your retirement if consistently practiced over a 30-year period.

Your share economy revenue is also a good hedge against inflation because prices for your services would be expected to increase with the general economy.

Just like any other income you receive, supplemental income requires proper reporting to adhere to tax codes. So although supplemental income may sound like a good idea, there are additional responsibilities that accompany the extra revenue.

Another requirement is to ensure that you are properly insured. An umbrella policy is a relatively low-cost option to gain additional coverage, but specific policies should be explored to best protect your household. How much extra work will it be? Extra cleaning? More wear and tear on your vehicle from shuttling passengers around? Is it worth your time?

Now that you’re ecstatic about the potential of supplemental income, it is important to remember to maintain a healthy work-life balance. Utilizing these assets requires you to hire out maintenance and cleaning or do it yourself. As life progresses, it becomes less appealing to spend a full day at a career job only to go home to additional housework outside of your everyday duties.

Operating a business with your personal assets may reduce your time with the family or ability to enjoy the simple pleasures of life. Taking part in the share economy is a viable option for almost any household, but it may not be right for you.