The ability to make money without trading your time in return has long been the holy grail for many people. But what many people don’t understand (which may be the reason they aren’t able to achieve it) is that any time you earn money in your sleep, there’s major work to be done beforehand. And, there’s no quick road to making a passive income, either.
This quote pretty sums up the reality of how passive income is achieved:
“Many people think that passive income is about getting something for nothing. It has a ‘get rich quick’ appeal… but in the end, it still involves work. You just give the work upfront.”
What is passive income? Passive income is when you make money while not being actively involved and trading your hours for dollars. For instance, you create and sell an online course, which was pre-recorded and available to anyone who wants to purchase it. It’s completely go-at-your-own-pace and you don’t actively need to be involved live teaching the class.
Another example is creating YouTube videos and podcasts. These are pre-recorded and people can watch or listen at anytime they want. You don’t actively need to be involved when they decide to consume your content.
There are many forms of passive income. The internet has brought upon a lot of new passive income opportunities to people. But not everything is online. In this post, we’ll look at some of the best and most effective forms of passive income that you can start building up towards today.
1. Sell informational products you made
Have you ever bought a course, an e-book, a podcast, or anything else that was a piece of digital information? The answer is likely yes, and when you clicked the “confirm” button, who knows what the author was doing?
If you create an informational product that adds value to people’s lives, it could be the best passive income idea you’ve ever had. It’s best because you only need to build it once (as long as it’s evergreen material), then watch the money roll into your bank account for as long as people buy it.
If you are considering starting an informational product but aren’t sure where to start, here are 6 steps to follow:
1. Brainstorm information product ideas
Write a list of at least 10 ideas you could do right now.
But how do you come up with ideas when you have no clue where to start? Well, a quick Google search should give you an idea of the best selling informational products. You can also think of some you know that are doing well.
While you find these pages, you may want to take note of information like the value proposition, pricing model, and messaging.
2. Choose the information product
In your research for information product ideas, you’ve likely come upon any of these:
- Training platforms
- Mini degrees
- White papers
Remember that not every informational product’s purpose needs to be to make income. You can also use it to grow your email list and get more people to participate by gating the product and asking people to complete the call to action to reveal the content.
While your research showed, one option might be more profitable, always create something realistic to your skillset. Otherwise, the quality of information and the product itself might not be good enough to compete with others in the space.
3. Create your business plan
A launch won’t work without a golden outline. Some things to include in your plan are:
- A problem
- A solution
- Key metrics
- A unique value proposition
- An unfair advantage
- Marketing channels
- Audience segments
- Revenue streams
- Cost structure
Of course, many of these things are going to change as you move forward. However, it’s essential to have this thought out so you can set goals for your informational product.
4. Find out the product’s demand
Before you even consider a product, you want to make sure people want it. You can do so by asking followers in your email list, social media accounts, or even pitch the idea in a blog post.
With a question as simple as “would a course on content marketing add value to your life?”, you can identify:
- If the course you’re going to create is interesting.
- The number of potential buyers.
- The general target audience.
Before giving further time and investments into the product, it’s crucial to gather this information beforehand.
5. Create and launch your informational product
Now that you know the basics, it’s time to create and launch your informational product. While you’re in the process, there are a few things to keep in mind that will help you move along smoothly:
- Make the product actionable.
- Provide case studies and real-life examples.
- Ask successful people in your industry what they think about your product.
- Offer a free trial or money-back guarantee to build brand trust and reduce hesitation.
- Let your buyers know you’ll support them if they need any help with your product after purchasing.
6. Promote and sell your informational product
The last step is what will earn you a passive income. If your marketing strategy is solid, and you have your landing and sales page set up, you’ll be making money in no time.
2. Use affiliate links in your content
Affiliate marketing is all about creating and growing relationships with brands. When you make money through affiliate marketing, you need to have a website or platform to promote other companies through links. When someone uses your affiliate link to make a purchase, you’ll get a commission.
A lot of people think you need to own a blog to make passive income through affiliate marketing. That’s not entirely true — while having a blog is one way, you can also add affiliate links to your YouTube videos, email, Instagram, podcasts, and a ton of other avenues.
There are two options to find affiliates:
1. Reach out to companies directly.
2. Join an affiliate program.
While either way works, if you’re a new affiliate marketer, it’s suggested you join an affiliate program. Mostly because affiliate programs help track important data points like number of views on a link, how many people complete a purchase, how many clicks the link gets, and the revenue generated by a merchant.
Without a record of data points like these, affiliates may have a hard time getting paid, and merchants could get ripped off by affiliates that present false data.
So between forming relationships and keeping track of crucial analytics, affiliate programs have their work cut out for them. In exchange for their services, they do charge a commission for each action completed. It keeps their platforms free to sign up.
Some of the most popular affiliate programs are Amazon Associates, eBay partners, Shopify affiliate program, Clickbank, and Lead Pages partner program.
3. Insert display ads in your blog
Have you ever visited a blog, and you’re presented with ads? Sometimes these ads can be for products you were JUST searching on Google. Display ads are a great way to make passive income. Like banners on the highways, visitors on your website will see your ads in the sidebar, header, footer, or inserted in the article they’re reading.
Display ads work in the way that you (the blog owner) will earn a commission each time the ad gets clicked. The more traffic you get to your site, the more commission you’ll make. While you can make anywhere between 3 to 20 cents per click, the worldwide average is about 5 cents per click.
To put this into perspective, if you have a 1% click rate and you have 100,000 impressions per month, it means you can expect to receive $50 per month. Although that doesn’t sound like a lot, you’ll eventually earn more once you get higher bidding ads and more traffic/conversions on your site.
So, where to start?
Is your blog ready to start displaying ads? Like affiliate marketing, it’s recommended you join an ad network. You’ve likely heard of Google Adsense before, but there are many more networks you may want to consider. First of all, Media.net is a highly respected alternative to Google Adsense. Some even argue that it’s better, depending on how commercialized your blog is. Secondly, Monumetric allows you to make money not only from clicks but also from video ads loading in your sidebar.
Before you apply, there are some basic requirements you need to meet. Although the conditions are different from network to network, here are the requirements for Google Adsense.
- Your website/blog must be at least 6 months old.
- You must have a valid address and payee name.
- Your website/blog must be active.
- The content on your blog must be original and unique.
- You must be at least 18 years old.
- You must comply with Google Adsense’s policies.
The commission you get depends heavily on the CPC in the niche and the competition. Because most niches are so heavily saturated, you’ll likely make the lower end (3-5 cents per click). However, some niches can be extremely profitable.
4. Invest in rental properties
With the demand for rentals around the world, it’s positive your rental property won’t be vacant.
While this passive income idea requires you to have money before you make money, it’s one of the best ways to make passive income because you get to set your rental price, the money comes in every month, and it doesn’t require much work once you’re set up.
However, if your goal is to make passive income with your rental property, you need to consider 3 things:
1. How much return you want on the investment.
How much passive income do you want to make per month? Let’s say you want to make $1,000/month. The mortgage of your property costs $2,000/month and other costs and taxes are $400, you need to charge the tenant $3,400/month.
2. The property’s total costs and expenses.
There are so many costs homeowners don’t think about when buying a house. Do you need mortgage insurance? Hazard insurance? Do you pay condo fees? Are utilities included in the rent?
3. The financial risks of owning the property.
Renting a property always comes with financial risks. First off, hopefully, the tenant is careful and doesn’t damage the property. You also run the risk of getting a tenant who pays late.
Although most places have high rental demand, you always risk of buying a property in an area where people aren’t looking. Always do your research before choosing a location to buy.
Finally, are you buying a house in the Carribean? This could mean hurricanes. How about on the West Coast? If an earthquake hits, that could cost thousands in damage or even losing your entire home.
In the end, to really be able to get the desired return on investments, you must consider all these factors and incorporate them in your rental price. And remember that although rental properties can earn a heck of a passive income, you need to take the good with the bad.
5. Become Wolf of Wallstreet and invest in stocks
Owning a dividends stock is the idea that will provide you with the most effortless passive income. Like investing in real estate, you need some initial start-up cash. But once you buy the stock, all you need to do is sit back and hope it skyrockets.
The trick with investments is to look ahead to see which stocks are going to be profitable and invest as early as possible. I have a friend who invested in Bitcoin during the company’s first week of business. With an investment of $1,000, my friend sold his stock and ended up with $125,000 before Bitcoin saw a crash.
In another case, someone I know invested in marijuana stocks before marijuana became legal in British Columbia, Canada. Although he didn’t make a fortune like my friend who invested in Bitcoin, he still made a 10% return.
According to Brett Owens from Forbes, stock buyers who look ahead of time have the potential to make an impressive annual return of 15%-25%.
So, how do you know if a stock is going to make a return or be a complete dud? Honestly, it’s a gamble as sometimes companies have a huge buzz, and investors say things like “THIS stock is going to be huge because…” However, there’s been so many times where social proof got the best of people, then the company ends up crashing, and nobody makes a return.
Also, to avoid putting yourself at extreme financial risk, it’s suggested you don’t put all your eggs in one basket. A study has found a lot of amateur investors are failing to diversify their investments, and the effect is so catastrophic that the investors would be better off choosing stocks at complete random.
So, how much money do you need to invest in a stock?
Although every stock will be different, there is a general calculation you can use to determine the amount per share (that’s if the app or website doesn’t already tell you).
To calculate the average cost, divide the total purchase amount by the number of shares purchased to figure the average price per share.
To put this into practice, if the total purchase amount is $5,000 and the number of shares is 50, the calculation will go as follows.
5,000 ÷ 50 = $100 per share.
6. Use your car to make passive income
Do you own a car? I bet you didn’t know you can use your car to make passive income and still drive it at the same time.
First of all (although not ideal), you can rent advertising space on your car. Have you ever seen a standard passenger car with ads all over it? Well, many people do this and earn as much as $500/month. With this passive income idea, you can go on living your day normally, as long as you don’t care what people think.
You can get hooked up with advertisers by making an account on sites like Carvertise and StickerRide. The only requirement is that you drive your car daily to public places like malls, highways, beaches, and events. You can even choose the brands you want to display on your car.
The second passive income option is to rent your parking space. How can you let people know your space is available? Just upload some pictures of the space with a description somewhere like Craigslist. Many people’s apartments don’t come with a parking space of their own, so in cities, people are constantly looking. While most parking spaces go for $100/month, you can charge a lot more if you’re in the heart of downtown or any other busy places.
7. Sell your photography
As a photographer, you can earn passive income by selling your photos online. Photographers of various skill levels are in high demand from large corporations, medium and small businesses, graphic designers, bloggers, publishers, and marketers.
Wouldn’t it be cool to see a picture you took displayed on the front page of a website?
The kind of pictures most commonly searched for and bought are:
- portraits of kids, teens, adults, and elderlies from different cultures all around the world.
- Pictures of people working in coffee shops, on laptops in coffee shops of offices, writing, speaking in front of a crowd, or anything that shows someone’s productivity.
- All types of food, including street food, fine dining, coffee shop food, and colorful foods.
- Cityscapes, highrises, people commuting, street lights, and colorful districts.
- Tools like hammers, nuts, gears, and screws,
- Forests, waterfalls, animals, logs, moss, ferns, or anything else that’s nature-related.
- Travel shots from around the world – with a posing person and without.
There are various ways and places you can sell your pictures. First of all, if you have a blog, that would be the best place since nobody takes a cut, you can set your own terms and conditions, and you can set your own prices. In short, you’re 100% in control.
If you don’t have a blog and need to sell your pictures on a website, there are plenty of websites like Adobe Stock, Shutterstock, Alamy, and Etsy.
The only requirements for most of these websites are you must be 18 years or older and sell your own photos. Unfortunately, these companies take a huge chunk of the sale. Adobe Stock even takes as much as 67%!
For Shutterstock, you can initially make 25 cents per downloaded photo, with a tiered set of raises of 33 cents, 36 cents, and 38 cents per download as you reach $500, $3,000 and $10,000-lifetime earnings milestones
8. Buy a blog
As one of the earlier passive income ideas in this article was to build a blog, that’s not always the best move. Building a blog requires so much time setting it up, creating content, getting SEO right, etc. Only for it to MAYBE be successful and make passive income in a few months (or years depending on how much time put in and your strategy).
If you’re an amateur blog creator or you want to skip all the beginning stages, you can buy a blog that’s already out there and making passive income. Many entrepreneurs are realizing the value in this, thus why websites like Flippa continue to grow at a steady rate.
Of course, if you buy a blog that’s making a lot of money, but you have 0 interest in the niche, you’re going to have a hard time up keeping it when needed. With that said, there are a few things to keep in mind when choosing which blog to buy:
- Choosing the right niche – are you interested? Is it high in demand? How competitive is it? How much do other blogs in the space make?
- Deciding which monetization methods you prefer – what are you most knowledgeable about? Affiliate marketing, CPC ads, direct advertising, or selling of digital products?
- Market price – it’s normal for blogs to sell for 6 to 24 times what they make in a month. Of course, the more money it makes, the more you’ll pay. The more upkeep it takes, the less you’ll pay. It’s up to you to decide how much you want to pay, depending on the amount of time you want to give it. Just remember, the goal here is to make passive income (meaning you don’t do much work), so it may be better to pay more upfront.
- Buying the blog – go on the right sites (Flippa.com and EmpireFlippers being the best ones), and stick to your criteria from the points above.
Note: when buying a blog, ALWAYS get proof of what the seller claims. More than just the monthly income statement but also all the analytics, latest paid tax receipts, any legal papers, …………..
9. Peer to peer lending
Banks don’t lend money from the kindness of their hearts, and you don’t have to either. Peer to peer lending matches those who need money with people who are willing to lend money at a cost.
But why would lenders borrow from you instead of the bank? That’s because they often don’t qualify for traditional loans from banks or credit unions. And the lenders can usually charge more interest than a bank in exchange for lower requirements. Sometimes the interest can average above 10%!
To become a lender, you’ll need to meet some qualifications such as living in a state that allows it, and you must meet the amount of verified income that can vary from state to state. Commonly, you’re required to make over $70,000 per year, but some states like Utah don’t have such requirements. Beyond that, you just need a bank account of some kind like online banking, credit union, etc.
So, what if you cant lend what the borrower is asking for but still want to make passive income?
Well, you don’t need to worry. The way a lot of companies work is you’ll invest in only a part of the loan. If the borrower is asking for $10,000, you’ll invest anywhere between $25-$100. This is called a note. Lots of people will help this person get a $10,000 loan. And, the same group of people will collect the interest on this loan when the payments begin.
If this sounds like a passive income option that is right for you, you can set yourself up on any of these websites to get started.
No passive income comes easy. But once you’ve gotten to a point where you’re earning it, you’ll want to have that income stream for the rest of your life. Luckily, you aren’t limited to one option. Smart entrepreneurs know having multiple streams of passive income is the way to go.
Some entrepreneurs make so much from the passive income they only need to work 3 days per week. Does it sound like the life you want? The sooner you start, the sooner you’ll be able to make money in your sleep.
Did you enjoy this article? Read about side-hustles here.