Earning passive income sounds like a dream, but you often still have to work plenty hard to do it. Let’s take a look at what passive income actually is — and how you can get some.
What Is Passive Income?
Passive income is any source of revenue you earn when you’re doing something else.
For instance, if you sell T-shirts at a local festival, you’ll earn money every time you make a sale. That’s an active income stream. But if you set up an online store at a website and customers can buy T-shirts from you whenever they like and you don’t have to be involved in the sales process, that’s passive income.
Setting up passive income, however, takes work, like partnering with a business to supply the T-shirts and mailing them out to your customers.
So how can you earn passive income? Consider these 12 ideas:
— Rent out space in your home.
— Advertise on your car.
— Create a blog.
— Rent your old home.
— Create a product.
— Start a business that relies on passive income.
— Become a silent business partner.
— Design T-shirts.
— Be a pet sitter or house sitter.
— Open a high-yield savings account.
— Apply for credit cards with rewards.
— Invest in your retirement.
[How to Turn $1 Million Into Passive Retirement Income]
1. Rent Out Space In Your Home
Yes, you could rent space to a tenant, but you could argue that that’s not entirely passive income, especially if it’s a difficult boarder or tenant who takes up a lot of your time.
Instead, you might want to rent out space for somebody’s stuff. There are a lot of websites that can help you do that, like Neighbor, Spacer and StoreAtMyHouse.
“There are many spaces in your home that can be rented out for storage, parking and workspaces, such as basements, attics, closets, garages, driveway and sheds. If you have a pool, you might rent it out for parties, water aerobics classes, swim lessons or training. A large yard can be rented out for events or parking large vehicles such as boats and RVs,” says Ryan Barone, CEO of RentRedi, a property management software.
Don’t expect to get incredibly wealthy if you rent out space, but you could make a few hundred bucks a month. Spacer, for instance, suggests you might make $350.
Even if you do go with a tenant, Barone says that tenant-landlord technology has made being a landlord more amenable. “Becoming a landlord is not as complex and time consuming as it once was,” he says.
2. Advertise on Your Car
Some advertising firms will pay you to let them display ads on your car. Some of the big names include Carvertise, Wrapify, StickerRide, Free Car Media and ReferralCars. The advertising “wrapping” can be removed and won’t damage the car’s paint.
Many of these firms actively court ride-share drivers, since they’re on the road a lot, but they’ll usually work with commuters, too. You probably aren’t going to have much luck with these advertising car companies if you work from home and your car is parked in a garage somewhere.
You make money simply for driving around, running errands and commuting to work. Generally people report earning a few hundred dollars a month, and sometimes up to $1,000. Wrapify estimates you might make $264 to $452 a month if you wrap your entire car with their ads. Free Car Media says you can make up to $400 a month.
While you may feel a little foolish at first, driving what will essentially be a mobile billboard, this is arguably one of the best sources of passive income. You’re going to drive anyway; why not earn money to offset at least the amount you spend on gas? Once you go through the hassle of getting approved for one of these vehicle wrap companies — and it can be a process — it’s passive income all the way.
3. Create a Blog
This can be a passive form of income, but it can also be a lot of work. If enough people visit your blog and thus see the ads on the page, and especially if they click on ads or affiliate partners, you’ll make money even while you sleep. But it may not be much money, and you won’t make money if you don’t have fresh content on your blog.
Jessica LeBrun of Naples, Florida, has a graphic design business as well as a blog, OnMoxieandMotherhood.
“I have left the site untouched for almost a year at a time before and still earned monthly income from ad revenue and affiliate sales,” LeBrun says.
“It’s important to note, this is possible because of the amount of initial work I put into the site,” she adds.
During slow months, she generally pulls in $200 to $300. If it’s a high-traffic month, she may see as much as $800 or even $1,200. Google’s algorithms have sent her less traffic lately, LeBrun says, but Pinterest traffic has increased.
“I actually think if this increase continues I’ll be more profitable each month for the rest of the year, but too early to say for sure,” she says.
Not every blog generates $200 a month, even after a lot of initial work. It depends on how much interest there is in your subject matter, how much internet traffic you manage to capture and other numerous factors beyond your control.
4. Rent Your Old Home
The bad news is that buying a condo or rental home requires a significant down payment, and it’s expensive. Still, if you can buy a property — or move into a new house and rent your old one instead of selling it, you can create a very solid passive income stream.
“The best way to earn passive income is through real estate,” says Omer Reiner, a real estate agent and president of FL Cash Home Buyers LLC, a real estate investment company based in Ft. Lauderdale, Florida.
“When you buy an asset like real estate, you usually make money twice,” he says. “You make money because the asset increases in value and when you rent it out and earn rental income. However, real estate can be difficult to get started in.”
“My best advice for getting started is to choose a market where you want to buy,” Reiner says. “Then, spend a few months becoming an expert in that market before you start buying. Doing this will help you avoid spending too much for a property. It will also help you start uncovering deals.”
5. Create a Product
This can be extremely difficult to pull off, but it is the ultimate form of passive income.
Of course, you could lower your sights and do what LeBrun has done. She has an Etsy shop.
“Whenever I design something for my kids or my household, like a behavior chart or a birthday invite, I just add it to my Etsy shop,” she says.
She adds that she also sells the same products on her blog, increasing her passive income stream abilities.
“I know this income could grow if I put more time and effort into adding more products to my shop,” LeBrun says.
“However, I am happy with the sales coming through for things that I designed and used for myself, listed once, and then never have to touch again to make sales. The digital products are sent to the buyer automatically once I set up the listing, so I am able to collect the money for the sales without any further work,” she adds.
6. Start a Business That Relies on Passive Income
Laundromats are often perfect passive income businesses. Generally, your customers can help themselves. You may want to hire somebody to be there occasionally throughout the day to clean the place, or you could do it yourself.
Tide Cleaners is a dry cleaning and laundry franchise. For what it calls a “neighborhood drop store,” you would need $1.1 million in liquid capital and a net worth of $2 million. This is one of those “it takes money to make money” situations.
Self-service car washes and vending machine companies are also businesses that generate passive income. While you don’t have to physically be at these passive income businesses to make sales, they’re still businesses. You will be working a lot, maybe more than you expect, to keep them profitable.
7. Become a Silent Business Partner
You could invest in a business as a silent partner. In this case, you’d be the one with the deep pockets and your partner would be the one exerting all or most of the energy and time to run the business.
You could come up with an equitable way to split the profits, and as long as the business is a success, you’ll have a passive income.
8. Design T-shirts
If you’re an artist, professional or up until now a hobbyist, there are a lot of companies that will help you sell your artwork as designs for T-shirts and other merchandise, like coffee mugs. Spreadshirt, Designhill, Zazzle and CafePress are a few.
Some websites charge fees to sell your designs, but most don’t. Generally, these companies take care of the marketing and shipping of the shirts; if your design is bought, you’ll receive a commission, usually around 10% to 15%. It may not make you a fortune, but once you’ve uploaded your design, anything you earn from a sale is passive income.
9. Be a Pet Sitter or House Sitter
House sitting, dog sitting, or both, is not entirely passive since you’re feeding and walking a dog or bringing in somebody’s mail. But often you’re doing your own thing in somebody else’s home or maybe yours (if you’re just pet sitting).
A number of websites offer house or pet sitting gigs, like Rover, MindMyHouse, Housesitter.com and TrustedHousesitters.
How much you’ll make depends on the home, the pet and the part of the country you live in. Chances are, this won’t be a full-time passive income career but just occasional or regular extra money flowing into your bank account.
10. Open a High-Yield Savings Account
Opening a savings account to store money for mid- or long-term goals or your emergency fund is not only a good idea, it’s an easy way to earn passive income.
[READ: How Much Should You Save In an Emergency Fund?]
“One of the easiest and fastest ways to start generating passive income today is to move your savings to a high-yield online savings account,” Andrea Woroch, a shopping consultant and U.S. News contributor, said in an email.
Woroch said that if you’re going with a traditional bank, you probably won’t earn all that much.
The national average annual percentage yield on savings accounts is 0.46% at the time of publication. Many high-yield online savings accounts are paying more than 5% interest.
“It’s an easy way to earn some extra cash,” Woroch said.
[See: Best High-Yield Savings Accounts]
11. Apply For Credit Cards with Rewards
The reason that credit cards offering cash back, miles or points are so popular among consumers is that they provide income while you’re making purchases you were going to make anyway.
If you have a good credit score and can successfully apply for a rewards credit card, earning 1% to 5% back on everything you purchase could give you a steady source of passive income.
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12. Invest in Your Retirement
Keep in mind that every time you put money into your retirement portfolio, you’re passively making money.
Sure, you can lose money in investments, but over time most investments go up in value. For example, investing in dividend-producing stocks in a taxable investment account could generate some passive income each quarter. And while investing in your retirement accounts may not help you pay the bills right now, it’s a passive income strategy that will help you pay the bills in the future.
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12 Ways to Build a Passive Income Stream originally appeared on usnews.com
Update 05/08/24: This story was published at an earlier date and has been updated with new information.
