Investing is not the only way to earn money. With the concept of sharing-economy in full flow and millennials wanting to ‘experience’ things rather than straightaway ‘own’ them, a whole new avenue for making money is here, thanks to e-commerce and digital platforms. Yes, you guessed it right — you can earn money by loaning articles to people for a specified time period. No, it is not just about renting out space. Today, the list of things that are borrowed starts from cars, bikes, scooters, cycles, cameras, mobile phones, clothes, jewellery, hardware tools, household and electronic appliances, furniture and even video game consoles. Platforms like sabrentkaro, rentongo, gorenty, rentomo etc. allow owners to list many products and earn rent. Do remember that you should be aware of the risks of renting out goods for commercial purposes.
For many millenials, living light is living right. Apart from the pain and the patience required to buy things, the one-time costs or EMI liability, and maintenance hassles etc. are driving more people towards renting. This is where product owners come in. If you have the right thing to be put on rent, there is always somebody out there who wants to borrow it for the right price! Digital platforms are targeting locations, which have a good proportion of IT/BPO crowd like Bangalore, Mumbai, Pune, Delhi, Noida, Gurgaon, Hyderabad and Chennai. These target groups have no qualms into renting. Let us have a detailed look on how product owners, like you, can make some cash, what rules to follow and other details.
Remember the 1980s & 1990s when people used to borrow a VCR from the neighbourhood during weekends to watch movies? Cut to 2018, and the concept has got a huge boost due to a proliferation of technology-backed platforms. Practically, everything can be listed for rent --- accessories, appliances, automobiles, baby products, books & media, camera, equipment, furniture, gaming, jewellery, kitchenware, laptops & computers, mobiles & tablets, musical instruments, sports & fitness, toys & games, TV & audio video.
In most platforms, 3-4 steps is all it takes to post your products: provide your product details, address and set your preferences for renters. This means, typically, as a product owner you should give a nice title and clear description of your product along with some high quality images & specifications. State the condition & date of purchase, cost value and rental details along with any security deposit you want. Of course, the platform will verify the details like your credentials, and may even do a check to see whether the articles put up for rent are not actually stolen. For companies who are professionally into the rental business, there are some charges as part of various membership options. For individuals, it is a free listing in many cases.
Coming to the rental value, product owners should do a survey of similar products to understand the amount of rent they can charge. You can allow the renter to take your product/appliance for a day, a week, a month or even more. This allows you to realise a monetary value of the things you do not use at all, like furniture, appliances, apparel etc. after using them for a while. The rent depends on the condition of the actual product available, duration of rental and other factors. Sedan cars can fetch rents of Rs 1,000-2,000 per day. Scooters and bikes can get you Rs 200-800 a day. Rent on cycles is much cheaper. Products like AC (Rs 500-2500 a month), air cooler (Rs 150-300 a day), video game consoles (Rs 300-400 a day), geyser (Rs 400-500 a month), fridge (Rs 500-1000 a month), TV (Rs 500-1500 a month), laptop/PC (Rs 100/day), furniture (Rs 20-100 a day), clothes (Rs 250-400 a day), DSLR cameras (Rs 200-1000 a day), smartphones (starting Rs 100-200 a day) can fetch you good money.
Do remember to check with the digital platforms about the charges/fees that will be levied. At the moment, listings are free. But a platform may charge you some money once you get a renter. Try to also find out who --- you or the platform --- will keep the security deposit. Many platforms have their own payment network. This allows renters to pay money digitally. Some platforms allow owners to take money from borrower the way they want ie. cash, card or wallet.
One should avoid cash transactions in general, because of the inherent risks of handling cash, the chances of getting fake notes and also other safety issues. If you have used a platform to get renters, do not try to bypass the system and make deals offline. Digital platforms give you an organized system including private communication between owners and renters. When you bypass this network, you are exposed to all sorts of risks including dealing with unverified people who may not really be who they claim to be.
Just like companies like Airbnb allow you to host space ie rooms in your apartment for guests, digital platforms have taken this ahead by letting you rent different goods. There is no mandatory requirement of renting out such stuff for long-term. In most platforms, you are free to go with your own terms and availability. If you know your product will be unavailable for rent or you won’t be able to respond to requests for several days at a time, you can always unlist your product temporarily. Do remember to re-list it when you’re ready to rent again.
Many platforms have strict rules and even make borrowers/renters sign agreements. This protects the owners from any liability. As the owner, you are never responsible if the borrower/renter gets injured with your product for example bicycle/bike or any electrical appliance. Check with individual platforms about all damage and personal injury. In case of damage, ideally, it should be the borrower's responsibility to repair the borrowed item or pay for a replacement. Do remember that in case you have insured your item, do check with the insurer about the applicability of cover when you rent it out for commercial purposes.
One of the problems is when your stuff gets stolen. While platforms do their background check and you can also do too, there are always nefarious people out there. If somebody steals an item and does not return it, you do not have a lot of options. You can lodge a FIR at the nearest police station with the help of the platform, but that’s it. If products are stolen, they may be far off by the time you actually understand. So, it is always better to do a check of credentials of people, and avoid renters who seem unscrupulous. A proper agreement in place is an ideal solution, but it is unlikely that renters with short-term needs will go for it.
In terms of taxation, one should check with tax advisors and chartered accountants about this kind of income received as rent from letting others borrow your goods/articles. Since this income does not fall in the category of salary, it should be placed in ‘other/business income’ category. Also, get clarity on whether this will be construed as a supply of services or goods.
The author is a financial journalist with 13 years experience