15 Quick, Easy Ways to Start Generating Passive Income

In the last three tutorials, we’ve covered:

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  What passive income is and how it works.


• The difference between passive income and active income, and how to stop trading your time for money.


• 
  How to work out if passive income is for you, and what you need to think about before you begin.

Those three tutorials are going to form the base for everything else in this series. If you haven’t read them, you might struggle to follow along. However, now that we’ve got the foundations laid, we can start to get into the nitty gritty of ways to generate passive income, so you can start working on one idea that's best for you.

Multiple Ways to Generate Passive Income

There are varied ways you can get started generating passive income. 

Some of these, like writing an eBook, will be familiar ideas but others will be a little more out there. The point isn’t to give you an exhaustive list of passive income ideas, but instead to show you just how many possible options there are depending on your financial situation and how much time you’re able to devote.

It’s important to remember that a successful passive income project often takes a lot of hands on time and is hard work to get off the ground. Once it’s going, it might be passive to maintain, but to get it started, it won’t at first. 

Each of these ideas has different active requirements. Some of these are easy passive income ideas with and others are a bit more complex. For some, you might be able to get ahead by investing cash; others absolutely require you to invest hours of your time. In either case, you can get stared quickly. 

So without further ado, here are 16 ways to generate passive income and get started right now. 

1. Invest in the Stock Market

If you already have a retirement savings account like a 401k, congratulations, you’re earning passive income! You might not have thought about it because you aren’t planning to use it for a while, but the money you’re investing in your retirement is generating a return while you sleep. It's one of the more easy passive income streams to setup and maintain.

While it’s obviously important to save for retirement, you can use the same principles to start generating passive income you’ll have access to now. Most banks offer investment accounts of some sort as well. Go in and, depending on your desire for returns and tolerance for risk, pick a few stocks you like or invest in a steadier index fund.

2. Write a Book I: The Traditional Route

Writing a book is one of the most traditional forms of passive income. You write the book, someone publishes it and then you get a royalty for every copy that’s sold. It’s a system that’s been around for hundreds of years. If you’re a great writer, have an interesting story to tell, or can otherwise bring something unique to the table, traditional publishers might be interested. 

This is a difficult approach to take with passive income but it can be one of the most rewarding. Imagine walking into a bookstore and seeing your book on the bestsellers wall or leading the sales charts on Amazon. The problem is it’s incredibly slow and time consuming at every step. You won’t be seeing a return quickly.

3. Write a Book II: A Self Published eBook

Traditional publishing has a lot of advantages over self-publishing—great editors, marketing support from the publisher, an advance—but there’s one big catch: it’s hard. Sure, you can write an amazing book proposal but if you can’t get the attention of an agent (and then a publisher, and then the reviewers, and so on) you won’t get anywhere. Thankfully, there’s an alternative.

With the likes of Amazon’s Kindle platform, anyone can publish a book online. There’s no guarantees it will sell, but it’s a lot easier to get to the point it could sell than with traditional publishing. There are also plenty of inspiring examples of authors profiting off self-publishing their own ideas. 

Writing a book takes a lot of time so, although there’s great potential for passive income, you should make sure writing a book is something you’re passionate about. If not, you’ll waste your time writing a bad book that never sells.

Learn more about profiting with making self published books and how to format them for Kindle: 

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  Editing
  
  
  How to Format an eBook for Kindle
  
  
  David Masters

4. Real Estate Investment I: Long Term Rental

If you’ve just received a lump sum, or just have cash sitting around in a savings account generating very little interest, one potential option is to invest in real estate. 

In plenty of places around the world, the rent you receive from a one or two bedroom apartment exceeds the monthly mortgage. Obviously, there’re additional expenses like upkeep and taxes but if you’re selective with the property you buy, you can have someone else paying off your mortgage; if you’re really good, you can even turn a profit now. 

One of the better ways to make this sort of strategy work is to buy a place that’s in need of repair and, rather than invest massive amounts of money, do the work yourself. You can then rent it out for even more.

5. Real Estate Investment II: Airbnb

If you’re prepared to get a little more hands on with property management, buying a place to rent on Airbnb can be a good way to go. The returns will be less stable than renting it out to one tenant for several years and will take a lot more of your time to manage, but the potential for revenue is a lot greater. 

In Dublin, where I live, places on Airbnb are often rented out for one week, for the same amount a local would pay to rent a similar place for a month. Learn more about how to get started as an Airbnb host.

6. Invest in Friends and Acquaintances 

Everyone’s got that one friend with a “killer business opportunity” that he just needs a bit of capital to get off the ground. That’s not the friend to invest in.

Instead, if any of your friends or acquaintances have small, successful businesses and are looking for investment to grow, it can be an interesting opportunity for you. 

Bear in mind, this is one of the riskier options on this list. Not only can you lose your investment, but you can also lose friendships. Be very very careful about who you invest in.

7. Buy Something in Bulk and Sell it On

Many things can be bought in bulk for a fraction of the cost you buy them in the store. If you’re prepared to buy something like salt (for de-icing), coal, wood, and so on, by the tonne rather than the bag, there’s a potential to make good money selling them on.

How active or passive this business model works out is up to you. You can go totally hands on, selling coal door to door yourself, or you can just store the salt, paying local teenagers on commission for each bag they sell and deliver. It’s a business model with a lot of potential if you get creative. 

8. Sell Some Branded Products

If you’ve already got a business, one of the simplest ways to start generating passive income is through selling branded products. Get a few mugs or t-shirts with your logo or business name on them and offer them for sale. If you’ve got loyal customers, or a suitably interesting business name, things could take off. 

9. Get Active In Your Local Start Up Scene

A lot of cities are starting to get active start up scenes. Small, generally tech businesses cluster together and try to grow into the next Facebook or Google. These can be great opportunities for investors. 

Early stage start ups often struggle to get capital (in the form of loans) from banks; angel investors can fill the gap. If you get involved in your local start up scene, possibly mentoring or sharing your professional skills, you might be the first person in line to invest in the next Uber. If you pull that off, you’re set for life.

Obviously, things can also go disastrously wrong here. Most start ups fail and picking the ones that won’t is hard. This is a fun side project if you’ve got some money to invest, but not something you should bet your house on. Passive income is great, but it’s not worth losing everything for.

10. Micro Lending

Like start ups, small businesses can also struggle to get loans from banks. The difference is that most angel investors don’t want to invest in a small landscape gardening firm or a family restaurant. 

Peer-to-peer lending, or micro lending, services, like Funding Circle, let business get small investments from tens or hundreds of regular people. It works like this:

• Harry’s Steak House needs $10,000 to upgrade the kitchen.


• Harry lists the loan on Funding Circle.


• You come along and decide you’re prepared to offer $200 at 10% per year. 


• Another few hundred people come along and make similar offers ranging from $10 to $1000.


• The loan gets funded.


• Harry’s repayments are divvied out among all the backers according to their share of the original loan.

Peer-to-peer lending is a really interesting area and more and more people are getting involved, as it's a relatively easy passive income stream to setup. Each of the sites has slightly different rules and requirements but they all generally claim to give you an annual return of between about 6% and 10%.

11. Sell Stock Images 

If you already take a lot of photos, selling some as stock images can be a good way to bring in a bit of passive income. Online marketplaces like PhotoDune let anyone sell photos:

Obviously, there is quality control and you need to have signed modelling releases, but otherwise, you’re pretty much free to sell whatever photos you’d like. You can also branch out into selling other stock and template product types product types as well, such as website templates, graphics, video files, and more.

12. Sell Crafts Online

This one really straddles the line between passive and active. Through online stores like Etsy, anyone can sell their craft projects. These obviously take hours (or even hundreds of hours) to make. They’re very very active, hands on projects. 

However, if something like sewing or woodwork is a hobby that you would be doing anyway, then selling the things you make for fun is pretty passive. It’s all about finding the balance so that you don’t accidentally turn your hobby into a poorly paid and stressful job.

13. Sell T-Shirts and Other Things Online

Selling t-shirts online is one of the hot passive income schemes at the moment so it’s something we’ll dig into deeper in a later tutorial. Basically, there are services like CafePress that let anyone upload a design and sell it on a t-shirt. If you come up with something that captures the zeitgeist, it can quickly go viral and make you a lot of money. Alternatively, it can sit on CafePress and never sell. 

Selling t-shirts is one of those businesses that can be really passive. You can outsource almost every aspect, from the design to the manufacturing and the the marketing, to someone else. Automating things does eat into your margins but it also make it hands off and an easy passive income stream to maintain.

14. Rent Out Equipment You Own

If you own something expensive that other people need to use occasionally, there’s a good chance you can rent it out. 

Take camera equipment for example: with ShareGrid you can rent your camera, lenses and so on, to other people in your local area. If you’ve invested a few thousand dollars in a drone, this can be a good way to recoup some of the money. There are plenty of people who’d love to use a drone for their short film, but can’t afford to buy one themselves. If you’re not using it on the day they need it, why not make a little bit of extra cash?

As with all the suggestions, there is a small amount of active work. You do have to deal with handing over the gear and getting it back, but it’s pretty minimal. 

15. Buy an Existing Blog or Website

Flippa is an auction site for buying and selling websites, domains and apps. There are some people who make money by creating a niche website, building it up to a small amount of revenue—say $300 a month—and then selling it on to someone else for a few thousand dollars. Then they’re on to their next niche.

If you’re looking to get started with a website but aren’t sure where to begin, Flippa can be great. You get a small business that’s already up and running, with, hopefully, a large potential to grow for a few thousand dollars. If you’re relatively cash rich but time poor, and looking for an easy passive income site that's already setup, it’s a good way to start. 

16. Buy a Race Horse

Okay, maybe don’t really buy a race horse. 

I just want to point out that there are millions of weird and wonderful ways you could make some passive income if you keep your mind open to them. Some of the crazier ones I’ve seen people do are back poker players in the World Series of Poker (the investor gives them the buy-in in return for a cut of the winnings), and, yes, buying a race horse. 

These might be high risk-high reward strategies that one should take care if considering, but there’s something to the potential for a quick return.

Wrapping Up

And there you have it: 16 ways to get started earning passive income right now. They cover everything from online projects to offline projects, high cash investment ideas to high time investment ideas, easy passive income plans to more complex pursuits. 

If you’re stuck, wondering what sort of passive income options are available to you, you should now at least have a few more ways to generate passive income. Learn more about how to quickly get started with making passive income.