How to Build Passive Income For Non-Passive People
Everybody talks about how to build passive income now. Its popularity as a buzz word began with “The Four-Hour Work Week.” Do you really know what it means though?
Some people think it refers to a magical way to make money without any work. Nope. Whether you choose developing a product, entering affiliate marketing, creating an investment portfolio or one of the plethora of other methods, you still have to work. The idea behind wanting to and succeeding to build passive income rests in its work stages. You put in a multitude of effort in the beginning and eventually reach the point where you can nearly automate the management of the business.
The Ultimate Guide to Building Passive Income
If you want to increase your income now and continue it at that level into retirement, you need to build a passive income project that can last through the years. You need a product or service that people will continuously need regardless of how much the world changes.
Sounds like a tall order, right? Well, Ferris did it. He wrote “The Four-Hour Work Week.” Sure, it has to be updated now and then, but the principles behind it remain the same. Those will not really change. He then built a website around the book. Next, he developed an email list. That lets him easily reach his existing customers - his customers meaning his readers. The people who read his book, especially those who bought it, qualify as his customers. Of course, now Ferris has authored multiple books. His email list made it easier to market those.
So, would you like to join Ferriss in building a passive income? Here is a quick guide on how to do just that.
Passive Income Defined
The term passive income refers to any income earned using a method requiring little to no daily work to generate and maintain. Most of the methods used to build passive income require some work to get started, but once established, they can earn you money in a seemingly automated manner that lets you make money even while you sleep.
Wealth Building
Sure, Wealthry.com devotes an entire website to wealth building, but let me synthesize an entire website in one sentence or two. Out of all the wealth-building tools the top one, your income, you can control. You choose your career. You choose the jobs for which you apply and, ultimately, land. Your effort in those positions determines your salary. You decide whether or not you will start a side gig. You decide your income. So, stop by Wealthry to learn how to make money, how to be better with money and create a great financial plan.
If you grind and shine, you earn. If you sleep in and watch lots of television and play a lot of Xbox, you do not. You can add to your income in numerous ways. Perfecting a passive income probably tops the list because you can automate it, expand it, and, if you do it right, scale it to keep it growing, just like Ferriss has done with his book to the library of references.
Why You Should Build Passive Income
It adds to your wealth-building plan
It provides an early retirement opportunity
It provides protection from total income loss in case you lose your job
You will have an added income source if you can no longer work or you deplete your retirement fund
It lets you fund other business ventures
Realistic Income Potential
I am about to break your heart.
You know all those get-rich-quick schemes that promise you instant riches and island vacations and Gucci Cadillacs? Total fiction. Every one of them.
Let me mend your broken heart now. You can build wealth… if you work, save and invest. What you need is to build passive income that is profitable, meaning it provides a steady income stream. You need something that produces money long-term.
Greg McBride, CFA said:
You’ll catch more fish with multiple lines in the water. In addition to the earned income generated from your human capital, rental properties, income-producing securities and business ventures are a great way to diversify your income stream.
So, you want to get started right now and build passive income fast right?
Build Passive Income - Ideas for 2021
You can build passive income in many ways, but first, let’s take a look at what it truly is and which income streams are available. Nothing in life is free, so you will need starting capital for most of these options.
1. Investment Portfolio
Create a diverse investment portfolio. This allows you to produce large, long-term results with little work. Make sure you take advantage of your company’s retirement plan whether it offers a 401(k) or a 403(b). Leverage any matching contributions they offer by contributing your own maximum allowed deposits annually.
In addition to this, become a savvy stock investor. You can add to your portfolio by purchasing stocks on your own to build a separate portfolio with a mix of penny stocks, ETFs and major stocks. You actually do not need to have a ton of money saved to invest. You can use a site like Worthy to invest in bonds yielding five percent annually. Worthy pools the funds it has to make loans to small businesses. You can start with just $10. Another site to try, StreetShares, also invests in bonds that yield five percent annually. It pools the money and invests it in veteran-owned businesses. You can start with StreetShares for $25.
2. Real Estate
Once you have saved some cash up, purchase a house. You can rent it out in whole or in part. You can either create a rental home, then add more homes as time progresses or you can go the Airbnb route. With that option, you rent multiple bedrooms of the home as a bed and breakfast. Unless you hire a property management company, you have to spend time taking care of your home(s).
You can also try investing through a real estate investment trust (REIT) which pools your investment with others to purchase and manage a property. If you want to rent the whole home, you need to pay off your existing house first, but if you go the bed and breakfast route, you can open your doors to tenants while you live on-premises. Most Airbnbs do this.
3. Develop a Blog or a YouTube Channel
You need an original idea or expertise no other person could offer. You need a target audience large enough to generate continual online traffic. Both options require you to continually create original, engaging content that educates or entertains. The best content does both. Once you establish an audience and begin publishing to it regularly, you can sell advertising space. If you have the idea and the knowledge but do not write well or know how to produce video, you can shop it out. Hire someone on Upwork or Freelancer to help you out with the content development.
Perhaps you can write, but you lack the brilliant idea for the blog. You can purchase an existing blog. Find a successful blog that already uses Google AdSense to create a profitable monthly revenue stream based on advertising. A blog typically sells for 24 times the monthly income. That means if the site makes $250 per month, it would cost about $6,000. It will pay for itself in two years. After that, everything else is profit. Keep it lively by posting pertinent, targeted blogs. Fresh content helps it continue to grow and add new customers who also buy related items like e-books and affiliate products.
4. Develop Digital, Marketable Products
You need a target audience and traffic, but you can develop a marketable product that sells. You still have to market it. Try an e-book or an app. You can probably find a need to fulfill just by reading forums on your favorite topics. You probably have a hobby. I’ll bet that within that hobby, people have remarked of a need. Fill that need. You will make money so long as your product fills it well and you market it properly. You can offer a free and a pro version of the app. With an e-book, you earn royalties from the publisher for every sale. If you self-publish, you will make all the money.
5. Open a Storage Facility
This also involves a property purchase, but you can open the facility as you pay for it. The storage rents will pay your monthly principal and interest. You can still make a profit as you pay for the loan for the storage facility. You will need a manager for the property and to properly secure it.
6. Enter Affiliate Marketing/Sales
While some folks can make money at affiliate marketing without a successful blog or an active website, it makes it easier to have one or the other. It also works if you have an active social media account like Twitter. You choose products to promote or services to re-sell. The sponsoring company pays you in either a flat fee or a sales percentage. ClickBank offers the simplest method of finding products and services. You can also contact vendors directly. The best choices for you will be those that actually interest you, so you have an actual affinity for the product or service.
7. Sell Stock Photography
Those with a talent for photography can use their photos to build passive income selling and licensing their use on sites like Shutterstock and iStockphoto. You typically earn a sales percentage or a flat fee for each photo. Since this usually involves licensing, you can build passive income with just one or two popular photos. You need to properly tag the photo so that customers find it. That requires hashtag research.
8. Rent Your Useful Tools or Sports Equipment
You know all that stuff in your garage like the canoe, paddles, the ping pong table, the truck, the trailer and more? You can make money off of that stuff. Rent it over and over instead of selling it. Rent out your trampoline for parties. You can rent them through Craigslist or AirBnB with an experience. You will only need to be present for people to pick up things and drop them off. Alternately, you can hire someone to do that.
9. Invest in Someone Else’s Business
You can become somebody’s silent business partner. That phrase means you simply invest the money, and they run the day-to-day business and make all of the decisions. You only take an equity position in their company. It is called a silent partner because you never contribute to decision-making. You just cash the checks you earn from the profits of the business.
Step up Your Financial Game
Be Smart with Your Money.
10. Create an Online Course
You are an expert at something. You may not realize it. You may not think of yourself that way. It is okay. You are an expert. It is time to admit it to yourself. Go ahead and create an online course to teach that. Whether you make the best-baked goods, punt a football like nobody’s business, code the most elegant websites known to man, you can sell that knowledge.
You do not have to be an Internet genius. You can use a website like Udemy.com. It provides a development toolset and it hosts the courses. That means that you get help marketing the course, plus it appears in search on their site. That gets you in front of potential customers. To make a class, you need text content, video lessons, task checklists, mini e-books as lesson supplements and audio files.
You can make several courses then bundle them in separate packages at various price points. Offer one with every course included, one with half and one with an intro package that has just the first one or two courses. That takes advantage of those who want to dip a toe in the water and those who want everything there is to offer.
11. Create an Online Guide
Maybe you do not write and just are not a videographer. No worries. You can create a guide. Maybe you know GIS. You can create a map with a data site tied to it. One example of this, SecurityGuardTrainingHQ.com, offers a clickable US map with a pop up for each state that shows the security guard requirements for that state. Your site offers genuine, actionable information and you can sell advertisements, add Google AdSense and affiliate links. You can make the resource free or you can sell memberships to access the information.
12. Licensing Music
Similar to the stock photography idea, you can license the music you have written. Rather than licensing only full-length songs, you can license snippets, samples of your own songs and short pieces of 30-seconds or 60-seconds. These are typically purchased to use as intros and outros to videos. You earn royalties whenever someone uses one of your songs.
13. Network Marketing
Multi-level marketing, now known as network marketing, lets you build passive income by gathering a team beneath you to also market the same products. You earn commissions off of their and your sales. Examples of these companies include Avon, Young Living Oils, Pampered Chef and AdvoCare.
14. Design T-Shirts
Use a site like Cafe Press to create custom T-shirts. Once you design them, you just need to market the products. You will need to advertise, but once you start making sales, your customers will probably help you via word of mouth. If you already have designs, you can use Amazon Merch to upload them. Make your hashtags shine so people can easily find your designs. Amazon takes care of making them, packing and shipping them.
15. Sell Digital Files on Etsy
Let’s say you make digital scrapbooking layouts or stencils or stickers or planner layouts. Say hi to Etsy. Etsy is your friend. You can sell your digital files on the site. Your customers pay via Etsy. You can have it transferred to your PayPal or your bank. Etsy provides the high-resolution files for your customers to download.
16. Car Advertise
You can get your car wrapped with advertising for a company. You need to find a specialized advertising agency in your area that brokers this type of ads. They will evaluate your driving habits, such as the areas you travel to regularly and how many miles you drive each week. If you match with their advertiser, they will wrap your car with an ad. You can earn a few hundreds a month since you get paid by the mile.
17. Open a Simple Car Wash
I’m not talking a drive-thru car wash, but a simple car wash – a cinderblock structure with a coin-operated pressure washer. Aside from needing regular maintenance, this provides passive income. You will need to hire out the one day a week maintenance.
Try to learn how to manage your income. You should set some money on the side every month, and put it in a savings account. After a while maybe you will wish to expand your business, and you can use your savings for investing. If you think that it is a good idea to have a savings account, here are suggestions for you:
18. Rent Out Your Car
Rather than driving for Uber or Lyft, list your car with Turo to rent it out for the other person to drive. The site works like Enterprise or Avis, but it is your car getting rented. If you do not mind other people driving your car, this works great and you can pick up money easily by loaning it out when you do not need to drive it.
19. Vending Machines
Vending machines require little maintenance. You stock them every couple of weeks and collect the money. Once you buy the machines, you simply stock and sell, stock and sell. It is not totally passive unless you hire someone to do it for you.
Getting the Work Done
Let’s face it. There is a lot of work to put all those together. Do not feel put out or outclassed when you see the websites or e-books or successful affiliate sites that already exist. They should inspire you. While it is a poor idea to copy another person’s project, you can leverage ideas from them. For example, the map idea. You would not do security guard information since it has already been done, but check to see if such a site guide exists for professional positions that require certification, licensing or continuing education. A few of these include Certified Public Accountants (CPAs), teachers, lawyers, doctors, nurses, truck drivers, etc.
Once you have your idea and project type figured out, you have to get the work done, in order to build passive income. Second problem: You probably do not know how to do all of the things you need to do to get the project done. You are probably really great at your main career, but it is doubtful that you know how to do all the things to run a business and most passive income projects require running a business.
Hey, you can outsource it! This works great because you do not have to actually hire people. You can just pay independent contractors to do the work. You will need someone to do the following:
- Bookkeeping
- Task management
- Editing
- Social media marketing
- Writing
- Web design
If you have not read Ferriss’ book, he advocates hiring independent contractors from Upwork and Freelancer. If your project to build passive income grows, it will turn into a fully-fledged business. To make it remain passive for you, you will need staff. Somebody has to do the work.
How to Get the Money to Start
You probably do not want to wait until you get rich to build passive income. Okay. You can bootstrap your business like every other small business person does. Most of these businesses you can start on a shoestring. Okay, except the rental house or storage building.
You will need some funding. You can open a credit card with a zero-interest or low-interest rate. You can obtain a small business loan. You can take out a small business loan. You might also consider taking out a peer-to-peer (P2P) loan. That is a personal loan made between you and another person, hosted through a website like Prosper.com or LendingClub.com. They earn the interest you pay, so once you get established you might consider this as a possible source to build passive income.
Start at Loanry.com. No matter what your credit score, you can use this website to determine which lending institutions would most likely give you a loan. Loanry does not lend any money. It just works like a shopping mall for loans. Lots of lenders list themselves on the site. They include items like the minimum credit score they accept. This lets Loanry match you with the institutions most likely to extend you a loan. There is no promise of a loan. Loanry just reduces the time it takes for you to find appropriate lenders.
By starting at Loanry, you can quickly determine if you can get pre-approved. You can do it without a hard hit to your credit report. The short pre-approval form only makes a soft hit to your credit. It uses your raw score alone to determine for which loans you might qualify. Pick the one it predicts you have the best chance at getting approved for and apply. Wait for the answer. You can shop online for your home loan, business loan or a new credit card to purchase business equipment.
Why stop at one? The answer is there is no reason to stop at one stream of income. So, how many streams of income should you have? Well, how many do you want?
If you can manage them or you want to hire a person to manage them, you can pursue as many streams of passive income as you want. You might open a bed and breakfast, invest, buy and rent a few houses, deploy a few vending machines, rent out your car, create a blog and a product and designs some t-shirts. Some of them essentially automate after you get them started, others expect maintenance like the vending machines.
What is Money Management?
You can grow the number of businesses as you grow your money. You grow your money through quality money management, the process of paying bills on time, saving, investing and utilizing credit properly. You do not need to choose what your neighbor did. You can start any business you want. How many sources of passive income you create depends on where you are financially and your financial goals.
Final Thoughts
You choose financial goals at Goalry.com, the parent site of Budgetry.com and Loanry.com. You need to create a financial plan, make a budget and potentially, obtain a business loan. Gee, you better get started. You have a lot to do and the sooner you start, the faster you’ll build passive income, meaning earn more money.