The idea behind passive income is pretty great: you make money without much effort. Many of the ways we make money online are, or will become, passive income.
You start by sitting down, putting on your thinking cap, creating something- an invention, a blog, an e-book. You create it and let it pick up in popularity, circulate, and sell. And you reap the benefits for months and years to come. Now, most of those things aren’t passive at first, but think of it like “royalties”. Actors and authors get royalties long after the creative period has passed but the art is still sought out and enjoyed by other people.
What are good sources of passive income?
2. Lending money, particularly low-risk fixed terms loans, is another passive source of income. Your money is doing the work for you, and you are benefiting with the interest you collect. If you’re lending to friends or relatives, make sure to have a signed written contract.
3. Owning a rental property might not seem so passive when it needs a new roof, but in normal times without heavy maintenance, it’s great. Having a rental property is basically getting someone to pay your mortgage for you. If you don’t have a mortgage, it’s just money in your pocket.
4. Can’t afford a rental property? Clean out you junk room and rent it out on Air BnB.
- If you live in the land of the $300/night hotel room (ie: San Francisco or Honolulu or NYC) this is a no-brainer source of passive income.
- Ok, washing some extra sheets and making strangers some eggs isn’t 100% passive, but it is monetizing your extra space with no financial investment required.
- Even if you don’t live in an extremely affluent area, you can still make extra money this way by selling your home as a true “locals” experience at a competitive price.
5. What about the junk room? Sell that crap! My husband and I did a book purge a few years ago. One by one, we entered ISBN numbers online on various buyback sites, saw who was buying what, and managed to get about $500 for 12 banker’s boxes full of our old books. But if you’ve also got an old treadmill and your son’s saxaphone and your husband’s tennis rackets and a bunch of Aunt Ginny’s beanie babies all tucked away and unused, get your tushie on Ebay and Craigslist and get rid of that stuff. It may be hidden treasure.
6. Buy a turnkey business and pay someone else (competent) to run it. You collect the profit, and benefit from the existing business infrastructure.
7. Or become a silent partner to an existing business venture.
8. Start a Drop Shipping business. You’re the middleman between buyers and sellers, and can sell wholesale products at huge markups (like, 2000%). The seller is responsible for shipping to the buyer, so you don’t have to deal with packaging or warehousing inventory at all. This does take time and effort to research, but once you have your store up and off the ground, much of it is automated and it becomes substantial and mostly passive income.
With enough different and healthy streams of passive income trickling into your pocket, you won’t need that 9/5 anymore.