Making Money Beyond the Basics: Lending and Renting
When it comes to earning money, most people think about getting a job or starting a business. But did you know you can also earn income by lending or renting what you already own? Whether it’s money, tools, or extra space, turning your assets into cash can be a smart and often simple way to build wealth. Best of all, you can start small and expand as you gain experience.
Lending: Earn Interest by Sharing Your Money
Lending money is one of the oldest ways to earn income. It works like this: you loan someone money, and they pay you back with interest. That interest is your income, and the longer the loan term, the more interest you can earn.
For example, imagine you lend $500 to a friend starting a lawn care business. They agree to pay you back $550 over the next year. That $50 is the interest you earned for lending your money. While $50 might not seem like much at first, lending can scale over time, especially if you reinvest what you earn.
If you’re thinking about lending as a source of income, here are some tips:
Start Small: Peer-to-peer lending platforms like LendingClub and Prosper allow you to start with small amounts, spreading the risk across multiple loans.
Assess Risk: Lending money always comes with the possibility that borrowers won’t repay you, so work with platforms or individuals you trust.
Look for Opportunities in Your Community: Sometimes, friends, family, or local small businesses need loans. If you’re comfortable and trust the borrower, this could be a win-win.
Renting: Turn What You Own Into Passive Income
Renting is another way to earn money without working more hours. If you have something valuable that you’re not using all the time, you can rent it out to others. This doesn’t have to mean owning rental properties like apartments or houses—there are plenty of smaller, creative ways to rent.
Here are a few ideas:
Rent Out Space: Have an extra room, basement, or even a parking spot? Platforms like Airbnb let you earn by hosting guests, while parking apps like Spacer help you rent out unused parking spaces.
Tools and Equipment: Many people need tools for occasional projects but don’t want to buy them. If you own power tools, lawn care equipment, or even a camera, you can rent them out.
Vehicles: Platforms like Turo let you rent out your car to others when you’re not using it, turning your parked vehicle into an income source.
Renting can be a great way to bring in extra cash, but it’s important to consider potential maintenance costs and any legal requirements, like insurance or local regulations.
Why Lending and Renting Are Smart Income Streams
What makes lending and renting so appealing? For starters, they can complement your existing income, whether from a job or a business. Here are a few reasons these methods are worth exploring:
Flexibility: Lending and renting can fit into your life without requiring a set schedule. You decide when and how to participate.
Low Barriers to Entry: You don’t need a lot of money or assets to start. Even small loans or renting out a single item can bring in extra income.
Scalability: As you gain experience, you can reinvest your earnings to expand. For example, start by renting out one room, then consider renting out a second space or buying equipment specifically to rent.
Passive Income Potential: Unlike a traditional job where you trade time for money, these income streams often require minimal ongoing effort once they’re set up.
Getting Started: A crash course
If lending or renting sounds like something you’d like to try, here’s a few quick tips to get started:
Take Inventory: Look around your home or assess your savings. Do you have unused tools, spare space, or extra cash you could put to work?
Start Small: Choose a low-risk option to test the waters, like renting out a single tool or lending a small amount of money through a trusted platform.
Research Platforms: Apps like Airbnb, Turo, and LendingClub make it easy to connect with people who need what you’re offering.
Understand the Rules: Check local regulations or platform requirements. For example, hosting guests may require you to follow zoning laws or pay taxes.
Set Clear Terms: If you’re lending money or renting directly to someone you know, agree on terms like repayment schedules or rental durations in writing.
Real-Life Examples: Inspiration From Your Community
You don’t need to look far to find successful examples of lending and renting. In fact, your own neighborhood might be full of people already doing it. Maybe a neighbor rents out their garage for storage or someone you know has started a tool rental business for weekend DIYers.
Here’s an idea: talk to local entrepreneurs or small business owners who rent or lend. They can offer advice, share what works, and maybe even help you spot opportunities in your area. You might be surprised at how much you can learn by asking questions and observing others.
This article coincides with the 2021 National Standards for Personal Financial Education Earning Income Objective 4-5
