My journey from active income to passive income sounds a lot like many people’s. After many years at a traditional job, I began to lose my drive.
Do you know what that feels like? That feeling when you’re just running on the hamster wheel, day in and day out?
I knew that I wanted something different from my life. Maybe you feel that way too. I wanted more freedom, more time to spend with my family and to spend doing things I love.
Many people talk about passive income. But what is it? How do you get it? And how can you get enough passive income to replace your current full-time job income? These are the questions I wanted answers to.
So, I started researching all I could find on passive income. Doing that led me to start this blog, where I now make six figures per year.
If I can do it, you can. So, I’m going to share several ideas you can you to start earning passive income on your own.
What is Passive Income?
Passive income is income you earn from doing little to no work. You’ll have to do some upfront work, but then the money just comes in.
Sometimes the money keeps coming in due to the type of passive income. Other sources of passive income are passive because you delegate any maintenance work that need to get done.
For instance, maintaining a blog like Well Kept Wallet requires daily work. We have a team that includes a blog manager, writers, editors and others. So, owning a blog isn’t passive income unless you delegate the duties required to run the blog.
However, there are other sources of passive income which can be “one and done” sources of income.
One way to earn more passive income is to have multiple income streams coming in. In other words, you don’t just choose one option for earning passive income; you choose two or three or more.
Having multiple streams of income is good for two reasons.
- You have more money coming in
- If one income source goes away, you’re not left without a paycheck
Keep that in mind as you read our list of passive income sources.
How to Generate Passive Income
As you start researching about passive income sources, keep in mind the types of passive income streams that are in line with your skills and your passions.
There are dozens of ways to make residual income out there. For instance, some people will tell you that network marketing is a great way to earn passive income.
Network marketing companies might work for some people, but we’re going to be talking about different forms of passive income. Ideas for passive income that you can do on your own.
Read on to see if some of these ideas might work in your life.
1. Invest in Land
Did you know you can earn passive income by investing in land? Of course, you can buy land and rent it out, such as farmland.
However, you can also participate in crowdfunded land ownership and rental.
Companies like Acretrader allow you to purchase shares of farmland. They handle all of the work of administration and property management.
You earn the profits from the farmland being rented out. Rent for the farmland is paid up from to reduce risk of loss from crop failure.
Check out AcreTrader today which boasts up to 11.5% annual return!.
2. Create Software
Have you thought about using your skills to create software to sell? Spencer Haws created a software program called LongTailPro.
LongTailPro is a keyword research software that helps businesses find the right keywords to get high converting traffic to their website or blog. In fact, Spencer makes over 10k a month by selling his LongTailPro software.
By partnering with other bloggers and advertising LongTailPro on his own blog, Spencer marketed his software in niches he knew would benefit from the software.
One interesting thing about Spencer’s story is that he hired out via Upwork for all of the development of the software. So, he didn’t actually create the software he sells.
He had the idea for what he wanted the software to do, but he hired someone else to do the work of creating the software.
So, even if you don’t necessarily have the skills to make a software program you can still make this passive income source work for you.
3. Purchase Dividend Earning Stocks
Many investors, including Warren Buffett, earn money by owning shares in dividend stocks.
Dividend income is money paid to shareholders of stocks in the form of cash. Every quarter–or sometimes monthly–companies that have dividend paying stocks issue dividend checks to stockholders.
You can reinvest those dividends to buy more shares of stock, or you can take the money as a paycheck and live off of it.
Any time you invest money in the stock market, it’s important to do your research. You want to know what you’re doing so you choose stocks that have a solid history of good performance.
Investing in index funds that hold dividend paying stocks is one option. Index funds are funds that hold stocks from several companies so that not all your eggs are in one basket.
Also, many successful investors choose to hold what are called “blue chip” dividend stocks. These are stocks in companies that have a long history of success. Think Coca Cola or 3M.
If you don’t have an investment account, check out M1 Finance because they allow you to trade U.S listed stocks and index funds for FREE.
A great way to invest in stocks and ETFs for free. That means no trading fees. They also have an app to track your investments easily on your phone.
4. Buy Music Rights
Did you know you can get royalties from music or movies you didn’t take any part in creating? Royalties are money actors, singers and other artists get when they create a song, TV show or movie.
Sometimes those artists want to sell future royalties because they need a lot of money right now. Maybe they want to buy a house or invest in a business.
So they sell a portion of their future royalties to investors. The investors make their money back with profits. Companies such as Royalty Exchange work to connect artists with investors.
5. Invest in Crowdfunded Real Estate
Another great passive income source is through real estate.
I’m not talking about traditional real estate investing. In fact, if you’re not careful you can lose big money with traditional real estate investing.
When I was younger I bought two rental properties in hopes of earning passive income via rental real estate. It didn’t turn out to be very profitable. In fact, I lost a LOT of money.
I had a tenant who was late on his rent consistently, I had a hot water tank flood the first floor, and I even had to evict said tenant.
There were a lot of expenses I had to deal with, and it took a lot of time to chase after rent I was owed. At the end of it all, I ended up taking a huge loss on the properties.
I still believed in real estate as a profitable investment, though, so I decided to check out crowdfunded real estate instead.
Many of the platforms out there require you to be an accredited investor, which means you need to have a net worth of $1,000,000 or make over $300,000 per year (if you are married).
I wasn’t an accredited investor at the time, so I knew I needed to search out other options.
One company that I came across is called Fundrise. With only $500 you can get started and invest in real estate.
So far, this is working out well for me. I’m actually making a profit, and I don’t have to deal with the headaches of real estate rental ownership.
Invest in real estate with as little as $500. While most real estate investing platforms are only open to accredited investors, Fundrise makes it accessible to all investors.
6. Be an Angel Investor
This could be a good source of passive income if you have a lot of extra cash laying around. Angel investors provide funding for small startup businesses or entrepreneurs.
When you invest with companies like AngelList, you can invest in specific startups, or you can invest in a basket of startups that is designed similar to an index fund.
Minimums for Angel investing products on AngelList range from $1,000 to $500,000.
7. Loan Money to Others
Have you ever heard of peer-to-peer lending? This is kind of like crowdfunded real estate investing.
A group of investors get together and invest money that is loaned to borrowers. As the loan is paid back with interest, you as the investor make money.
Of course, there is the potential that you’d lose money if the loan isn’t paid back. However, a lot of peer-to-peer loan companies rate loans you can invest in based on their risk level.
For instance, a borrower with excellent credit is less of a risk for you to lend money to than one with poor credit. You could choose to invest in lower risk loans if you want to minimize your chances of losing money.
Just know that investing in the lower risk loans will result in a smaller profit.
If you are looking for a lower risk option with a decent return, check out Worthy. They offer $10 bonds and pay a 5% return. One unique thing about them is that your money is liquid, so you can take it out at any time.
This can be a great benefit if you’re worried about possibly needing the money before the end of the investment term.
Invest in small business loans that earn 5% annual interest, and you only need to invest $10 at a time.
8. Pay Off Your Debt
A lot of people don’t think of paying off your debt as a form of passive income. But think about it this way.
The less money you’re paying in payments to creditors, the more money you have in your pocket each month. On top of that, getting out of debt quickly can increase your income even more because you’re not wasting money on interest charges from creditors.
If you want to get out of debt faster, there are companies that can help you do that. For example, you could check out Credible, which offers loan rates as low as 4.99% APR with autopay for refinancing your credit card debt.
Loan rates as low as 4.99% APR with autopay for refinancing your credit card debt.
9. Open a High-Yield Savings Account
This option won’t make you rich, but it is a way to earn passive income with very little risk.
When you choose to open a high-yield account with an online bank, you often earn a higher interest rate that with a traditional bank. This is because online banks have much lower overhead than brick and mortar banks. That means they can pass higher profits on to you.
One popular online bank is CIT Bank, which pays a much more competitive rate that many traditional banks.
The opening balance requirement is only $100. And you won’t pay any maintenance fees with CIT Bank.
Having a high yield checking or savings account can be a good way to earn consistent passive income. Again, the returns are low, but they are steady.
Pays more than 10 times traditional banks and offer competitive rates.
10. Use the Spare Space in Your House
Does your house or apartment have a spare bedroom? If so, you could make some passive income by renting it out on Airbnb. Airbnb is a popular alternative to regular hotels.
This is because it’s often cheaper than regular hotels and provides a more “homey” feel for guests.
Of course, there is some maintenance involved with this passive income source. You’ll need to be sure the rooms are cleaned after a guest leaves. However, you could hire a maid to do that.
My friends Steve and Annette Economides make over $1000 per month renting out their spare bedrooms.
11. Write a Book
Have you thought about writing a book and then selling books to produce residual income?
I did this with a book that I wrote. You Can Retire Early will show you how to make the right money moves so you can retire early. For each book that sells, I get a 10% royalty.
Of course, there is the initial work of writing the book. But after that, you can sell it on Amazon, which of course is a major sales platform.
And you will want to do some marketing. The more marketing you do, the more chances you have of selling your book.
If you’ve got good content that could help or entertain a lot of people, you might want to consider book writing as a form of potential passive income.
12. Earn Income From Affiliate Marketing
Do you have a blog or website? Or, are you thinking about starting one? Many blog owners make money by selling affiliate links on their blog.
Here’s how it works. You link to a product or service on your blog. When someone purchases that product or service through your link, you get paid.
Some people are making over $50,000 per month like Michelle Schroeder-Gardner who teaches others how to make money online with her course Making Sense of Affiliate Marketing.
Websites are easy to start, too, if you don’t already have one. In fact, I can show you how to start a blog in less than ten minutes.
You’ll need to get hosting service for your blog so it can be seen on the internet, but that’s inexpensive when you get a deal. Click here to get special pricing of $2.95/month with Bluehost.
Blogging can be great way to make money from home. You just need a computer, internet service and engaging content on your blog.
13. Start a Lead Generation Website
Another way to make passive income is to create a lead generation website. The point of a lead generation website is to pass leads on to local businesses.
For instance, let’s say you want to create leads for local realtors. You could start a blog that talks about owning a home or about real estate investing.
The site would contain links where people could contact you if they wanted more information. Then you’d pass that lead onto local real estate agents.
This is what’s considered a “warm” lead. It’s not total cold calling. Instead, the person came to your site and is seeking out more information. Professionals in any arena will typically be excited about warm leads.
Another way to earn passive income from a lead generation site is to advertise for other companies on the site. However, it’s important to know that making money this way requires your articles be high ranking in Google searches. And that means you’d have to learn about search engine optimization.
14. Sell Products on Amazon
A lot of people are earning passive income by setting up a shop on Amazon.
You have the option to sell your own products on Amazon. You can ship them yourself, but that’s not true passive income.
Instead, you could have Amazon send out the products for you? I have a friend who has done really well with this. He earns well above the six figure mark selling his own products online.
15. Start a Drop Shipping Business
It seems that everyone is shopping online these days. Because of that, drop shipping has become very popular. What is drop shipping?
Basically, it’s where you create a site that advertises other companies’ products.
A buyer would order the product from your site. Your site is set up to automatically send the order to the manufacturer of the product. The company that makes the product is responsible for shipping the item to the client..
With drop shipping, you don’t have to worry about carrying inventory. You’re simply a go-between of client and company who makes a profit.
If you’re interested in starting a dropshipping business, consider using a platform like Shopify to build your online store.
Sign up for a 14-day free trial.
Do you have information you can share that would help others? Maybe you know how to kill it in investing or paying off debt. Or maybe you can teach someone a skill.
You can pass that information on to others by creating an online course. Your course can include a variety of teaching techniques.
You can do it all via video, or via e-books or emails. Once the course is created, any sale is passive income for you. You can design the course so that the information is automatically sent to the customer after they pay.
The money you charge for the course goes into your pocket. Platforms like Teachable can do all the heavy lifting for you when creating your course.
17. Create YouTube Videos
I’m sure you’ve heard of–or probably even watch–some of these people making big bucks by posting YouTube videos. They post a video, and the video contains ads.
As the video creator, you earn money from the ads within the videos you create. The key to earning money on YouTube is growing a large audience.
You’ll want to spend some time reaching out to people who like similar content to what you publish on YouTube. Ask them to subscribe to your channel. Doing this will increase your YouTube following.
Once the initial work is done, you’ve got a passive income source on your hands.
Note that you’ll need to make a lot of videos (100 or more) to really make some serious cash at this business.
18. Start a Business or Buy An Existing Business
What about owning a business as a passive income source? You can start a new business or purchase an existing business.
The way to make passive income from starting a business is to be sure you’re hiring the right people to run your business. And it doesn’t necessarily take a lot of cash to start a business.
For instance, you might want to check out the book, $100 Startup by Chris Guillebeau. Chris wrote about dozens of businesses that started up for very little and are now earning six figures or more each year.
19. Open Your Own Vending Machine Business
Here’s an example of a potential business you can own. Corporations and other businesses such as gyms or dance studios love having vending machines available for clients or workers.
You can visit local businesses to see if they’ll let you install vending machines their clients can use. If you have the right types of snacks in your machines, you could make some big money.
Once you get approval to install the machines, ask workers or clients what types of snacks they want in the machines. This could help you increase sales.
To make this a truly passive income source, you can hire people to restock the machines for you.
20. Sell Your Photos to a Stock Photo Company
Are you good at taking pictures? How about earning passive income with your photos?
Companies and website owners purchase stock photos from sites such as Shutterstock for use on their sites and brochures.
Open a Shutterstock account, and once your photos are approved, clients can begin downloading them for use. You get paid each time someone purchases one of your photos for use.
The more photos you have uploaded on the site, the more money you can earn. Note that photos that contain people doing everyday things are the ones that earn the most money.
21. Create a Mobile App
Are you good at tech stuff? Do you have some unique ideas for mobile apps? Why not use those skills to earn some passive income?
Once the app is created and published, you earn money every time someone downloads your app.
Every app on your phone is making money for somebody, somewhere. For instance, Joel Comm made over $1Million from his iFart app.
And imagine the kind of money people are making from gaming apps such as Candy Crush.
You might not get to the million dollar mark, but even if your app brings in a few hundred dollars a month, that’s still some decent money.
22. Put Ads on Your Car
Did you know there are companies that will pay you just for driving you normally do every day? If you live in a major metropolitan area and do a decent amount of driving, you could earn money by having advertisements on your car.
Companies such as Wrapify wrap your car with ads, and then pay you for your daily driving. Usually the companies want cars that are in good shape with no dents or rust. These types of cars are easier to make advertising wraps adhere to.
23. Buy a Business That Operates Online
When you own an online business you can work from anywhere in the world. If you’re not interested in doing the work of starting an online business from scratch, you can buy an existing online business.
Companies like Biz Buy Sell list hundreds of online business for sale. The businesses range in price and in genre.
If you can find a business that aligns with your talents and skills, you could make some serious passive income. As with any business ownership, hiring the right people is key to making it true passive income.
24. Buy a Laundromat
Owning a laundromat is another idea for passive income. Cities everywhere have laundromats for people who don’t have in-house laundry facilities.
Here is how you could make owning a laundromat true passive income:
- Buy an existing laundromat business from someone interested in selling
- Hire a reliable and trustworthy person to manage the store
- Take home a paycheck
Start-up costs for laundromats can be pretty high, as commercial washers and dryers aren’t cheap. For that reason, you’ll probably be better off financially if you buy an existing laundromat business.
25. Purchase or Open a Batting Cage
One business you could start up for passive income would be a batting cage facility. Baseball is one of the most popular sports for kids in America. However, there aren’t a ton of batting cage facilities in most areas.
Starting a batting cage from scratch can be very costly. You’ll need a building, and the equipment to run the store. Buying an existing batting cage might be a better bet if you can find one.
Again, you’d have to find a good manager to do the work of managing the store. If you like sports, this might be a great passive income source for you.
26. Use Your Graphic Design Skills
You might have some ideas for great sayings that can go on shirts or mugs. Or just great designs. The cool thing about sites like Redbubble is that all you have to do is create your store and upload your designs.
They handle all shipping, payment, and customer service. When your designs sell, they send you a monthly check for your portion of the profit.
27. Invest in Bond or CD Laddering
Bond and CD laddering is when you own a bunch of bonds and/or Certificates of Deposit. You spread out their maturity dates so they come due at different times of the year. Then you’ll have cash coming in from them throughout the year.
Note that bonds and CDs typically don’t earn as high of a return as other investments. However, they are usually much lower risk too. Bond and CD laddering can provide a sure and steady passive income source for you.
28. Rent Your Stuff to Others
What about earning passive income by renting out stuff you own? Craigslist can be a great place to advertise your items for rent.
Products that you could rent out:
- Tools and ladders
- Party tents
- Tables and chairs
- Utility trailers
- Log splitters
- Cleaning equipment
You can even rent out your car when you are not using it with a company like Turo.
If you’re going to choose this passive income source, be sure to have all renters sign a contract. That way you protect yourself and your equipment in case something goes wrong.
I’d consider charging a refundable security deposit to protect yourself in case someone damages equipment too.
Passive income sources aren’t just for the wealthy. Everyone has to start somewhere. And there are many passive income sources you can get started in for less than $1,000.
Don’t let a lack of knowledge stop you from achieving your goal to have passive income–even if you want a lot of it! Do further research about the passive income ideas we’ve mentioned here.
Decide on four or five that seem right for you. Then get to work earning some passive monthly income!
Which of these passive income ideas appeal to you?