One of the things that I really like is creating passive income. Over the past few years, I’ve been doing my best to look for different ways to create income that doesn’t require too much of my attention. While I’ve found some great ones already, I’m still on the hunt for new ones because it is said that the average millionaire possesses 7 streams of income.
Despite the name, passive income isn’t passive at all. Most believe that you do not have to put anything upfront with it. That is entirely false. With passive income, you’ll need to sacrifice time and money upfront in order to build a passive cashflow. When you’ve invested those two things, you’ll be able to reduce the time it takes to grow or manage that cashflow.
I’ve done some research and found these 17 ways to make passive income. These passive income ideas differ from each other, so I’ve taken the liberty to put them in different tiers. Tier 1 will consist of ways that doesn’t take too much time and no money commitment at all. Basically, everyone can do them as soon as right now.
Tier 2’s will include some form of time and money commitment and some skills might be necessary in order to do them. But if you’ve done some Tier 1 methods, then Tier 2 will be a good step up for you.
Tier 3’s will include those that require more time and money commitment and it may also require more skills. But even though that is the case, Tier 3 methods include some of the best paying methods out there for you to be able to live off passive income. Some of these things I’m currently doing, some I haven’t and some, I plan to do in the near future.
Now, let’s begin!
TIER 1
Affiliate Marketing
One of the easiest passive income methods to start. You can start without any time or money commitment at all. Affiliate marketing is when a person markets a product of another company. The company gives you a special link called an affiliate link. When somebody purchases something through that link, the company pays the marketer a commission.
You’ll see a lot of these links on blogs and YouTube videos just like in mine. If you purchase through the links in my channels, I get a percentage of that sale that helps me support my goals.
If you shop at Amazon, check out Amazon Affiliates so you can get paid as well by promoting products through Amazon. The products that you use may also have an affiliate program, so look at that company’s website for any information regarding that.
Advertising on Your Car
You can actually get paid while you drive your car around the city. Fleet advertising companies like Carvertise, Wrapify and StickerRide will pay you to drive your car around town with ad stickers or decals slapped on to your car.
They will evaluate your driving habits, your car model and your driving record in order to properly compensate you. Once accepted, they will match you with one of their advertisers and “wrap” your car for no cost. Compensation varies from company to company, what car you drive and the advertisers willing to pay for you. Drivers can earn an average of $100 to $300 a month and with some companies, you can get a signup bonus as well.
Getting out and driving your car around may not be the exact definition of passive. But if driving your car is something you’re doing often, might as well get paid for it. And that’s a passive method of earning extra money while doing something you already do.
Selling Merch on RedBubble or Merch by Amazon
This is basically online selling without the hassles of looking for a supplier, building out a site, and mainly focusing on a specific industry: t-shirts.
RedBubble is a global marketplace for print-on-demand products using user-submitted work. They have products ranging from t-shirts, prints, hoodies, cushions, and more. Merch by Amazon is almost similar to RedBubble, where you can create print-on-demand products.
Whether which platform you choose, the process is the same. You create your artwork, upload your design to RedBubble or Merch by Amazon, fill out the product details and submit your product for review. Once approved, your product will be live and ready for selling on RedBubble or Amazon.com
I’m going to try this one out and experiment on this. I still need to do some research on what niche I’m gonna focus on and the designs that I need to make to stand out and sell more of the shirts.
Renting Out Household Items
If you have items in your house that you rarely use, you can rent them out for some extra cash. Many peer-to-peer rental sites list out a lot of different items. At Loanables.com, you can rent out your baby stroller, car seat, portable air conditioner, bike hitch rack and many more. As a loaner, you can rent your items for a day, a week or a month.
There is a risk though when renting your items out. It can be stolen or damaged and you’ll end up having to burden the cost and it’ll eat away from your profits. Your work will have to include listing your items in the marketplace, communicating with the renter and maintaining your rentals.
Selling on Kindle Direct Publishing
Amazon Kindle Direct Publishing is basically what the name implies: You can directly publish your books or ebooks here without the need of a publisher. But what people do specifically, especially the ones I saw on TikTok, is publish coloring books and journals.
What they do is find a seller for coloring pages in Fiverr, which may cost around $25+ for multiple pages. Then, they create their book covers using Canva. Package them all up as a printable coloring book, and voila! They’re now in business.
Create A YouTube Channel
YouTube is a time-tested method of creating passive income. Many have started to create their own channels and explored various income opportunities with the video sharing platform. Your channel can be about different things, to be honest. But it is highly recommended that you choose a specific niche where people’s interests are in.
You will have to invest the time to create videos, learn copywriting and the famous “YouTube algorithm.” You can start right now for free. But it is optional to invest in some equipment if you want to stand out and make the big bucks.
One thing I really love about YouTube is that creating one video can be an avenue for you to generate passive income once you’re an eligible partner. Yes, it will take time to grow your channel and a lot of awkward stares at the camera, but it will be worth it once you get that passive YouTube money.
TIER 2
Rent Out Your Storage Space
Some people like to rent their house space, but some like to rent that space purely for storage or event purposes. You can also do that and make passive income from it. You can rent out different spaces in your property as a storage or event space, such as an extra room, a portion of your garage, a backyard or a pool house.
You can list your space for storage rental in Neighbor.com, ShareMySpace, or StoreAtMyHouse. You have to prep your space, may have to pay some fees for listing and maintain the space. Work is minimal and you’re not exchanging a lot of your time for money.
Selling Informational Products
If you know something that most people don’t and they need that information, you can try your hand at selling informational products. Informational products can range from an ebook, a spreadsheet, online kits, audio files, transcripts and others.
These things take a small amount of your time and may require a small investment when it comes to creating the systems needed to make this business work such as an email autoresponder and a landing page.
You’ve probably seen different people sell their ebooks online, a PDF file, a spreadsheet calculator. And depending on the product, you could be making $1 per item or as high as $50. The pricing is completely up to you.
Investing in Dividend Stocks
I have been doing this one for a long time now. I invest in companies that pay me dividends every month or every quarter. Companies with dividends pay their shareholders a payment at regular intervals and all you need to do is invest and own the stock.
Dividends are paid at a specific date and the amount is based on their declared amount times the amount of shares you own. So, the more shares you own, the more money you will receive.
I am not a financial advisor but when it comes to Dividend Stocks, I invest a lot in REITs, or Real Estate Investment Trusts. I do that because it’s almost like owning a piece of real estate and earning rental income, but without the hassle of actually owning a rental property.
These REITs are huge real estate companies that rent out their properties to different people. Some REITs can be focused on the housing, industrial or agriculture industry. They collect rent from these renters, and by law, REITs are required to at least distribute 90% of its taxable income to shareholders in the form of dividends.
Make Money Blogging
This has been a time-tested way to make money online passively. You basically create a blog/website about something that people have interest in, create articles that are valuable, and acquire advertisers to pay you whenever someone visits your blog.
The simplest way to earn from advertising using your blog is through Google AdSense. Simply apply on their platform, fill out the form regarding your website, and submit the form. Google AdSense will evaluate your blog’s traffic, industry, uniqueness and whether or not it’s advertiser-friendly. Once approved, you can place banner ads on your blog and make passive income whenever someone visits your blog in the future.
Yes, you may have to continue writing articles in order to keep the traffic coming. But if you write evergreen content or content that is highly searchable, articles that you’ve written in the past month or years will still make you money.
Investing in Bonds
Bonds are the classic passive income stream for a lot of retirees, given their relative safety and stability. Bonds are basically IOU’s from the government or a corporation. You lend money to these entities and hold the bond for a certain period of time, where you get interest payments. When the bond reaches its maturity date, you get your principal back.
At my age, I actually don’t like bonds because there’s an opportunity cost with it. You’re holding money for a long period of time and by the time you take it out, inflation would have beaten your returns already. But maybe when I grow older and have limited work capabilities, I may invest in them.
Creating an App
You can create apps that people want and get paid for it. Your app could be a game or something that users use in order to perform some hard-to-do task. You can monetize your app in different ways, and let me share with you three monetization methods.
First, a freemium model, where the app is offered free when users download it, and users have the option to buy add-ons. Second, with that freemium model, you can run in-app ads in order to get some revenue from the traffic. And third, you can create a premium app that asks for an upfront fee or a subscription model in order to generate recurring passive revenue.
Some things that I don’t like about this though is that it will consume time creating and researching the app. If your app collects data, you will have to deal with different privacy laws. Since the app market is fiercely competitive, you’ll have to find creative ways to stay relevant. And that means working to add more features and keeping your users engaged with the app.
Peer-to-Peer Lending
Peer-to-peer (P2P) loans are basically personal loans between you and a borrower, facilitated through a third-party entity. P2P platforms include Prosper, LendingClub, Funding Circle and Mintos. As a P2P investor, you earn passive income from the interest payments made on the loan.
But since these loans are unsecured, you may face the risk of default and you could end up with no return at all. It will take time to master P2P lending and you’ll obviously need money with this, but as they say, big risks produces big rewards.
Build Royalties
Royalties are payments you get for having someone use your intellectual property. This is very common in the world of media such as in books, music and movies. But it also exists in the industrial world such as in copyrights, patents, minerals, gas and oil.
To make things simple, let’s use music. If you create music, upload it to a music distribution platform such as DistroKid, SoundCloud or Bandcamp. They will distribute your music to major music streaming platforms such as Spotify, Apple Music and Amazon Music. You will get royalties per stream and the streaming platform pays that out to your distribution platform, where you will be able to get the money.
It will take you some time to really get the big bucks passively, in the case for music, if you’re just starting out. So, that’s something you should consider if you’re thinking of creating passive income from royalties through music or any form of media.
TIER 3
Rental Income
Every new investors dream investment on their path to becoming a millionaire. Don’t get me wrong. A lot of people became rich because of real estate, but a lot of people think it doesn’t take a lot of work upfront.
If you don’t do the correct research and number crunching, you could lose all your investment and then some. There are a lot of factors to consider when buying rental properties but the most common ones are:
- The return you want on the investment.
- The property’s total costs and expenses.
- The financial risks of owning a property.
For example, if your goal is to earn $20,000 a year in rental income and the property has a monthly mortgage $2500 and $500 a month for taxes and other expenses, you’d have to charge renters $4,667 a month to reach your goals.
Selling Online Courses
If you have a skill that you wanna share with the world, get paid for sharing that! You can teach valuable skills and knowledge online for a good amount of money. You initially create the content for your online curriculum in a form of a video series, sets of audio files, or PDF worksheets.
Once you’ve created your content, you can host them in an online course provider such as Udemy or Skillshare, or you can also have your online course live in its own platform such as in Teachable.
Buying Royalties
This concept was entirely new to me when I was doing my research. This is a leveled up version of Building Royalties from Tier 2.
Instead of creating the media that will generate royalties, you buy the rights for the royalties. In other words, you’re buying ownership of an intellectual property. This is also almost similar to buying dividend stocks, where you buy a piece of the company and you get paid dividends for being a shareholder.
Artists sell rights to their IP because they may be in need of funding for their next project or whatever they need the fund for. You’re buying into rights of albums, songs and art of some of the biggest artists today like Drake or Banksy. RoyaltyExchange.com is a great place for this.
I put it in Tier 3 because I’m pretty sure that not everyone is going to be able to hop in on this right away. You’ll need to shell out around $100,000 to buy these rights, which you will hold on for a certain amount of time (years).