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Think smart, use what you have to make extra cash

Earn passive income through renting out property or goods

Pooling resources with friends could enable you to enter the property market, or to buy a larger property. Stock photo.
Pooling resources with friends could enable you to enter the property market, or to buy a larger property. Stock photo.
Image: Ekachai Lohacamonchai

The tough economic times and increasing interest rates, food and fuel prices call for one to have a side hustle.

But side jobs require you to put in time and effort and therefore many people are turning to the notion of passive income, which is less demanding, according to JustMoney marketing manager Shafeeka Anthony.

“Given that most people already juggle stressful jobs with household chores and childcare responsibilities, the notion of passive income has strong appeal. Passive income is generally earned with minimal labour and involvement on your part. It is not a second job or side hustle, for which you need to do ongoing work in order to receive payment, explained Anthony.

Anthony says examples of passive income include renting out property or goods (eg a lawn mower or big pots), earning dividends from shares, writing a book that you can self-publish for free or reselling photographs through an agency.

“If you have expertise in a particular sector, you could create a teaching product to pass on your knowledge. Another option, if you spot a product gap in the market, is to hire a freelance industrial designer to develop a prototype and then take it to a contract manufacturer. You can then sell this product online using automated payment options.”

This is what Josephine* is doing to make an extra income.

The 57-year-old woman said she rents out two shacks and the tenants pay R400 each.

“The money from the shacks pays for my two grandchildren’s transport to get to school. If I was not renting out these shacks, they would have to walk to school. Their mothers are unemployed,” said Mabaso.

She said she was previously employed and had one tenant until 2019 when the company she worked for was liquidated.

She got another tenant and says renting out these shacks during the three years she had no job helped her family a lot.

“I am now employed as a domestic worker. These tenants have helped me get through difficult times. If they were not here, things would have been bad because food prices have also gone up. I use my salary to do other things at home and don’t have to worry about my grandchildren getting to school,” said Mabaso.

Doing specialised house cleaning for other people at the weekends, like window or carpet cleaning for example, is another way of boosting income.
Doing specialised house cleaning for other people at the weekends, like window or carpet cleaning for example, is another way of boosting income.
Image: supplied

Anthony says generating passive income does require an initial investment of time and money, and you may need to acquire additional assets and skills. You can, however, start off on a small scale, he said.

He said one can apply the following tips to establish your venture as soon as they are done with the initial planning.

Learn from the best: Research your ideas thoroughly. The classic how-to book on passive income is The 4-Hour Work Week, by Timothy Ferriss.

Build up an initial lump sum: Set clear financial goals and develop a budget in order to build up an initial lump sum. Automatically transfer a portion of your pay cheque into a savings account, or join a reputable stokvel. Pooled money earns better returns because of the higher capital, and shared fees are lower.

Sublet: If you do not own property, you can sublet a room in your flat, a parking space, or even your car. Keep in mind that you will need the approval of your landlord and body corporate; and, in the case of your car, you will require your insurer’s approval. Be sure to also check for a potential increase to your excess or premium.

Invest: Rather than trying to pick individual shares, try investing in a unit trust geared at generating high dividends.

Rent out property: Pooling resources with friends could enable you to enter the property market, or to buy a larger property. Some financial services groups offer collective buying home loan schemes. Appoint a property manager and delegate the property management.

Consult a financial adviser: Finally, discuss your plans with your bank manager or a trusted financial adviser who understands your short-, medium- and long-term goals. It would be unwise to withdraw hard-earned funds from an investment to start a new venture, without being aware of the short-term tax and long-term retirement implications.

“Once you are committed to putting in some initial work, your efforts should pay off. You’ll enjoy extra flexibility and security when you are no longer solely dependent on a job income to cover your living expenses.

“Automation and other forms of technology have opened up many new avenues for generating passive income. You are unrestricted by geographical boundaries and there are enormous opportunities to scale up,” Anthony said.

*Not her real name

mashabas@sowetan.co.za

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