Passive income is money you can earn on a recurring basis from doing little to no work. Unlike active income, where the more you work, the more you earn, passive income has an initial level of work or money up front, then has a flat return after that without the same level of work going into it.
1. Invest in Real Estate Properties
The cost to invest in real estate can get high. But there are new options to invest in real estate besides buying physical properties or investing in REITs. Now you can use crowdfunding to become a partial investor in a much larger real estate deal. To invest in crowdfunded real estate, you can look into sites such as Realty Mogul and Fundrise.
2. Invest in Dividend-Paying Stocks
Most stocks that pay dividends are the sexiest investments, but they generate passive income. In most cases, your broker will encourage you to re-invest your dividends but you have the option of having your dividends dumped into your account for withdrawal. Ally Invest: Best for new investors, TD Ameritrade: Ideal for more experienced traders and E*TRADE: Great for any investment style.
3. Loan Money via Peer-to-Peer Lending
Peer-to-peer (or P2P) lending became popular about 14 years ago when Prosper first came onto the scene. It marketed itself as a way to borrow money without having to go to a bank. Instead, you can borrow money from someone else–who will loan it to you at a competitive rate.
4. Sell Your Photography as Stock Photos
If you’re one of the millions of people who love photography as a hobby, you can quickly turn it into passive income by selling your photos as stock photos. Instead of setting up a tent at a local art fair, hoping someone will buy one of your glorious photos of Ireland, you can turn it into a profit with sites like iStock Photo and Getty Images.
5. Write and Self-Publish a Book
Many people recommend starting a blog as a way to earn passive income. I don’t agree with that approach, as it can take a long time (and a lot of money) to build and grow a blog from the ground up (more on this below if you have an established blog). Instead, you might consider writing and self-publishing your own book.
6. Rent Your Home Out with Airbnb
Whether you have a rental home on the beach, a home that you aren’t at all the time, or just a vacant room in your home, you can rent it out on sites like Airbnb and VRBO. Now, this comes with a little more work and isn’t entirely “passive” all the time, but it can be if you set yourself up correctly.
7. Sell Products on Etsy
There are now two ways to sell on Etsy–physical and digital products. With physical products, you can either create something unique such as jewelry or buy and resell something–for example, vintage clothing. Etsy has been a great marketplace for a long time, helping creative people sell their goods. The problem is, selling physical products isn’t exactly passive income.