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Five Easy Ways To Boost Your Income

Five Easy Ways To Boost Your Income

Empty bach? Paying for campervan parking? What you don’t need right now can be rented out as part of the ‘sharing economy’ to put money in your pocket.

1 November 2021

Amy Hamilton Chadwick finds out how to turn an asset into an investment.

We know what an investment is: it’s something you buy to help you grow your future wealth. An asset isn’t necessarily an investment.

Assets like homes, holiday houses, boats, and campervans can improve your lifestyle, but they don’t bring you a return. They can also sit like a brick on your finances, costing time and money to maintain, without bringing in a cent. In some cases, they even lose value.

But you can now make almost any major asset bring you a return, thanks to the sharing economy.

Spare room or empty holiday home?

Airbnb is revolutionising the rental industry, to the extent that it’s spawned an entire mini-economy of property managers and suppliers.

It’s a fantastic way to make the most out of either a spare room or an underused holiday home. New Zealand has more than 20,000 listings on the site, with an average price per night of $126.

List a room, a shared space, a bed-and-breakfast, or a whole house. Prices start at $14 a night for a two-bedroom house in Oamaru and range up to $5,500 a night for a luxury three-bedroom home at a winery near Russell.

It’s not money for jam: you’ll need to pay for cleaning, wear and tear, linen, maintenance, water, and power; most of those would usually be covered by a traditional tenant. And you need to work hard to keep your customers happy, because bad reviews will rapidly ruin your business model.

But the returns are compelling. The Nested property return on investment (ROI) index (nested.com) compares long-term rentals with Airbnb rentals. In Auckland, the index calculates it would take 380 months to pay off an average priced three-bedroom property at the average rent, compared to just 108 months if you Airbnb it.

Gross income from an Airbnb can be double what you’d usually get for a long-term rental property (see page 53).

Lonely boat?

Put your boat to work for you by listing it on GetMyBoat.com. It has more than 65,000 boats available to rent across 171 countries, including everything from self-drive rentals (including quite large vessels) to luxury charters (up to $16,000 a day), and including kayaks, paddleboards, and jetskis. Your boat needs to be seaworthy and well maintained to be listed.

Underutilised car?

Vehicles are often cited as a great example of an expensive item that isn’t a good investment, because in most cases their value drops every year. But you can put your car to use when you’re not using it by renting it out using MyCarYourRental.co.nz or Yourdrive.co.nz.

Prices start from under $10 an hour, or you can rent it out daily or weekly.

You’ll need a Certificate of Fitness (COF), which is a warrant of fitness for commercial vehicles, from VTNZ, but as a bonus this site actually vets its renters. The rental period is up to you, so for example you could rent out your car when you’re away on holiday in your campervan.

Parked-up camper?

Then, when you’re back home, rent your campervan out until your next trip with Shareacamper.co.nz. This site has a range of vehicles from basic Bongo vans through to top-quality motorhomes, ranging from $50 to $300 a day.

Empty car park?

And once your carpark’s empty, you could rent that out, too – the Parkable app onsells empty parks throughout New Zealand by the hour or the day, and www.sharedspace.co.nz lists carparks for rent in the Auckland, Hamilton and Wellington CBDs.

Before you join the sharing economy

Renting out your assets has never been easier, but you need to remember your obligations and responsibilities – and manage the risks.

You have a duty of care to your customers and you need to check your rental is safe and fit for purpose.

It’s vital your asset is thoroughly insured – talk to your insurance company before you rent it out. You need systems to check your renters, rental agreements and documentation. Take photos before you rent out an asset, so you have a paper trail in case of damage.

There are costs associated with the repair and maintenance of your asset, as well as accounting, legal advice, and other paperwork.

You’ll need to consider your financial structures – do you need a new company to rent this asset? – and your tax obligations (see PwC’s article on page 54).

Every situation will be different, but there’s no reason you can’t monetise otherwise unproductive assets. Do your research, run your numbers, and you should have a happy and profitable future in the peer-to-peer economy.

Wellington and Auckland rank highly in sharing economy

Kiwi site Shareacamper.co.nz recently analysed 31 international cities to see where the peer-to-peer economy worked best. Both Wellington and Auckland featured in the top five overall.

Double your income with short-term stays

For prospective investors or owners, AirDNA, Airbnb’s analytic site, provides a wealth of data on Airbnb listings.

Of more than 6,500 active Airbnb listings in Auckland, half have an occupancy rate of 67 per cent or better, and the top 10 per cent have total occupancy.

One top performer is a one-bedroom apartment in the CBD, for an average of $134 a night. Similar one-bedroom apartments rent for around $580 a week on TradeMe. Assuming both are occupied 50 weeks of the year, the usual rental income for the year would be $29,000, while the Airbnb income would be $46,900.

Occupancy rates are the same in Wellington, with around 1,800 listings. A highly-ranked one-bedroom apartment in Te Aro averages $119 a night, compared to around $560 a week to rent a similar apartment on TradeMe. Rented 50 weeks of the year, the long-term tenant would pay $28,000, while on Airbnb it would make $41,650.

Remember that it’s not only your income that will be higher: tenant turnover, maintenance costs, and management fees will also be steeper.

By Amy Hamilton Chadwick

First published 20 November 2017

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