So, you found out, with all the information of the internet, that you own liabilities and not assets! What does that mean? Do you have to sell everything you own including the house and just buy rental property or a business? In my opinion, I think not. However, if you find yourself with a lot of payments and not enough money left over or unused items that seem useful, just not to you right now, I think theirs something we can do about that. With all the technology increases and a little openness to our communities, we can turn virtually any liability into a money generating asset!
First, if you are not sure what an asset is or a liability is you can google the literal definition. I will give you my take on it:
- Liability- Things we buy that will cost money to obtain and the value decreases over time, taking away from wealth creation. Cost to maintain and can possibly leave us vulnerable to legal issues. My easiest example is a fast car (like my post on ‘The Hellcat Mentality’). It covers all three of those issues. It’s relatively expensive vehicle, costing more than the average American salary brand new. It’s maintenance is very expensive costing thousands because of the latest technology involved in the vehicle. Finally, it is FAST! So, it is easy to lead to citations for speeding or in some cases racing (even if you just want to get to the speed limit of 60MPH in 3.4 seconds!), I still want one…
- Asset- Things we buy that will cost us money that have the potential to go up in value over time. Leading to a storage of wealth. They also have the potential of producing cash flow (generating income) when utilized correctly. Can be insured to mitigate loss prevention incase of a legal or physical issue. The easiest example would be a rental home. Typically goes up in value over time. It should produce an income to offset maintenance and generate some profit. The rental can have insurance to cover tenants, natural disasters and a host over other things to keep it’s value.
Now that we know what an asset vs a liability is, how can we make it work for us? The easiest way would be to make that liability earn it’s worth or generate income. With so many new technologies, we can use apps to market our items.
Lets start off with items we don’t use. If we haven’t used an item and can’t see ourselves using it for awhile, lets just sell it! If we need the item later in the future, we can just acquire it at another time. This frees up not only space but gives us money to buy something else that we really need at the moment, or to do the next thing….
Rent everything! That’s right, from your nice silverware, tools to patio furniture or even bedrooms and cars! Someone is always looking for an item you may have. They may not want to purchase the item long term or don’t have the room to keep it. Someone may be having a special quest over to their home and would like to have very nice silverware for the evening. They don’t, however, have the room to keep it or a reason to use it all the time. There’s apps like Yoodlize, Idle, etc. These apps let you rent out your items and get paid however much you want. They may take a cut but also give you some protection incase something happens to your items. I do not recommend very personal items or priceless things.
Many items are not going to rent out all the time, but you never know! Try to find out what you have that people may want a lot, but don’t have. Now, this is not a replacement for a second job, unless you want to specialize in this area, then by all means make it happen. It will get those items that you put money into, to generate you some cashflow!
In my opinion, things that will never go unwanted are tools and party items. If you have special tools or have celebrations often (or want to start to get these items ‘wink wink’), these items can take up room or just not something people would want to buy due to cost. You can take advantage of this and make them available when not in use. Then you not only get to help your community but earn extra cashflow on the side. I have a neighbor that sent flyers around advertising party chairs for rent. They would rent up to 100 chairs for a minimum of 5 hours. Depending on how many chairs and how long they would give you the price and even set it up and take it down for you! How cool is that!
I personally in the future would like to rent out some cars for a side hustle. There’s an app called Turo I like. They have many vehicles to suite your needs. From everyday drivers to luxury or even exotic cars! Most of the host on the Turo platform are like you and me. Just everyday people that are looking to turn a liability into an asset! Maybe they have an extra car that they only use for road trips, or didn’t want to sell an older car when they bought a newer car. Instead of just letting it sit and rot in the driveway, rent it out for how much and how long you want. I have a co-worker that rents out an RV on a similar platform that pays for itself. When he wants to travel in it, he just won’t rent it out at that time. If you’re worried about issues with people damaging, not cleaning or any abuse, the platforms usually take care of mistreatment for that. They try to make it easy for you to have a painless experience for your precious items. It is suggested that you do review any potential renters, especially the more expensive the vehicle.
Now, one of the more controversial asset or liability perspectives is the house. Depending on who you listen to, it could be a liability or an asset. In my opinion, It’s whatever you need it to be. My personal home to me is an asset. I’m defining it that way because the value of it is more than double the amount I owe on the home. It is costing me money to maintain it, but if I need the equity for some reason, I can refinance or take a loan out against it. Giving me a cashflow effect that’s not possible when renting. With my family all the bedrooms are full. Now, if for some reason I could’t keep up with the maintenance or even the payments, I think it becomes a liability. If the home is falling apart grass and other appearance issues that could lead to citations are present, the value will not be increasing. Even worse if the taxes are neglected a lean can be placed on the home and eventually taken away from the owner. However, if your home has unused bedrooms or you have a summer home and you are open to the idea, I would rent out the rooms or home if possible. I would be very selective on who would be the renter, but lets explore the idea.
If your open to a short term renter, the app Airbnb is a good place to start. You get some protection from the Airbnb platform to mitigate loss from potential renters. You would essentially become a hotel. Meaning you may need to wash sheets, stock up on tissue paper and other commonly used items in a hotel. Depending on your market, this can bring in a great income. I actually wish I would have thought about this while I was renting. Think about this. You buy a small to modest house. What if you learned how to take care of a rental property while you limited your responsibilities of the place you stayed. Giving you equity in a property while you saved for a home you really want! Yes there’s much to that but it’s just an idea for some.
If you have spare bedrooms and are anywhere near a college, I would invest in bunkbeds and rent out to college students! Depending on the location of the home and amenities you could offer ( rome square footage, washer/dryer, backyard, distance to the college, etc.), I would see no problem in charging $450 a person per month (or be competitive to the dorm rooms). Two people to a room or one if you want to limit the amount of people but charge more. If you have a three bedroom home, rent out two of them in this manner, you would stay their virtually free! If your a people person, you may even get good people that will make it fun to not be alone.
In conclusion, if you have liabilities, you now have assets! Don’t say I have no way to make extra money. We just need to be dedicated to spending time, a little research and opening our mind to the possibilities of what people in our communities need. This can be just for a vacation for you and your family, an item you really want or an actual job if you decide to pursue a rental business! I hope you make the most out of your items and be safe doing so. Let me know what you want to try or what worked for you!
Average Joe Chronicles 