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Passive Income Ideas That Work

by Jackie Beck

There absolutely are passive income ideas and opportunities that work — if you do. And that’s the dirty little secret of passive income: most of it isn’t passive right off the bat. You have to do some work to get things started, and then you’ve got to do some more work now and then to maintain the source of income once you’ve gotten things off the ground.

(If you’re looking for something completely passive, you’ll have to stick with things that meet the IRS’s definition, which states that passive income “can be generated only by a rental or a business in which the taxpayer does not materially participate.” Basically, own rental property, or buy or invest in a business that you don’t make decisions for or work in.)

But if you’re willing to put in some work up front, and do a little regular maintenance along the way, there are several ideas that might be right for you.

Some of the more common ones include:

  • Writing articles for money
  • Doing article marketing or blogging to promote affiliate links
  • Writing an e-book once and selling multiple copies, or receiving royalties from a traditional book
  • Creating a monthly membership web site
  • Creating a internet-based or CD/podcast-based course & selling copies
  • Holding a webinar once that refers folks to products you sell or make a commission on, and then replaying the webinar on demand or at regular intervals later
  • Selling stock photography
  • Creating and selling a smart phone app
  • Having a vending machine business
  • And more

Things to keep in mind

When choosing an idea, keep your skills and the amount of time you have available in mind. Some passive income ideas require relatively little work to get started, but others require a great deal of time and energy up front.

For example, you could probably write one or two articles a month on a variety of subjects in your spare time fairly easily, and gradually build up a stable of articles that are generating you income — but your income is likely to be very low for quite a while.

On the other end of the scale, creating an online course that attracts lots of students will likely require in-depth knowledge of a particular subject, significant marketing efforts, and at least a little bit of money to get started with a web site. Other things turn out to be not nearly as passive as they might seem, like my Pay Off Debt app that requires regular time for testing updates, and time spent marketing the app and responding to customer emails. Those ideas can still be a lot of fun though, and they’re passive in the sense that they’re not a complete dollars-for-hours trade like a 9-5 job would be.

The benefits

No matter what you choose, remember that you’re unlikely to get rich from passive income ideas overnight, if at all. But don’t sell yourself short. Given time, you can make a steady income that gradually increases while the amount of work you have to do to maintain that income either decreases or stays the same. And that’s pretty nice.

Want to know more? Check out taking passive income from idea to reality.

Posted in Make Money on 02.28.11 with 35 comments.

35 Responses to “Passive Income Ideas That Work”

  • Moneycone says:

    The last point is very important – you won’t get rich with PI, but is a nice cushion especially if you have multiple streams of PIs.

  • JT McGee says:

    All but one on your list is a passive income possibility that is probably best done online. Online vending machines probably aren’t all that practical yet :P

    That said, I don’t think it should be much of a surprise to anyone that your best shot to grow a passive income stream with very limited barriers to entry is online. There’s so much money to be made, and round the clock work hours that allow you to be just as productive at 3am as you might be at 1pm.

    • Jackie says:

      I actually tried to think of others that weren’t online, but all I could think of were vending machines, rental properties, and buying a business that you’re not involved with otherwise. (Although I imagine it’s pretty hard to be *completely* handsoff in a business.)

  • krantcents says:

    The only way you could be “hands off” in a business is being a silent partner. Passive income to me is investing unless I were a stock broker.

    • Jackie says:

      Yeah, I’m actually in a family partnership like that where I have no control whatsoever about any of the partnership decisions, but I think that’s an unusual situation. I think it’d be hard to buy a business like that.

      I’ve always thought of investing in stocks & bonds as a passive activity too, but was surprised that according the IRS, it’s not.

  • Jenna says:

    What about selling crafts? Marketing your hobby?

    • Jackie says:

      Selling crafts can be a good way to make extra money — or at least I imagine some of the etsy sellers are doing well. It may not be very passive though, depending on how much work it takes to create the craft. (Selling multiple copies of the same photo would be, but unique jewelry items or paintings, not so much.)

  • Hi Jackie,

    I think the most important part of your post is the following:

    “When choosing an idea, keep your skills and the amount of time you have available in mind.”

    The list of income opportunities for someone who is looking to earn some money passively will depend on and be shaped by, the unique qualities and resources of the individual. Because the truth is that almost anything can be used to generate money- online and off- if the person is determined enough and skilled enough to do it. In other words, when it comes to making money, it’s not just the idea, but the person behind it that makes the real difference.

    Regards,
    Adam

  • I really want to start some passive income streams so that I can eventually transition out of full time work but it really is tricky trying to start some of these things when all of your energy and focus is spent on your day job. Some days there is not enough brain power left to be creative and dream up things on your own. What I need is a partner who is the idea person and I can be the implementer.

  • Jessica says:

    I am also looking for passive business ideas. I own my own accounting services where I offer bookkeeping and general accounting services to small businesses as well as financial counseling to individuals. I’m looking for passive income to help supplement the income from my accounting business which is still relatively new. I love the idea of doing an ebook, but I don’t have the time to sit down and write it. Plus, I have no idea how I would market this book in a way that would reach enough people to generate extra money. Any additional ideas would be much appreciated!

  • Jay says:

    How about affiliate marketing, dropshipping, flipping websites, learning seo Google will bring ou all the traffic while your doing something else lol that is always a good one. Ebooks were mentioned above and that is a great passive income stream.

    Especially if they really go viral they will take right off.

  • Buck Inspire says:

    Great list of ideas and good warning about passive income requiring work. I would even say the ones defined by the IRS (investing and real estate) aren’t passive to begin with either. Without due diligence, you could easily lose your shirt!

  • i love the idea of building passive income streams for additional income. After reading the 4 hour workweek and reading pat flynn’s smart passive income blog, I realized that I have to start building passive income. It wasn’t until I lost my cushy job that my plan went into full swing. The best advice I could give is to look at what you like to do and what you can do and figure out how you can monetize it. Whether it’s a blog or an iphone app, you can make money as long as you provide a great serive or great content. Nobody want’s to be jipped so stay away form the scam’s.

  • Nice. I hope one day my own site will bring in enough income to pay for my utilities. Gotta start somewhere!

    I do like the idea of a book, though, and think I can whip away at a book over the course of a year or two.

  • Ors says:

    Trying to get my web business going to where i would make a nice income.

  • Lee B. says:

    This is a very informative site! I am also trying to get established (in the hopes of securing a stream of passive income) with an online trivia game called “History Lessons”. I also have a second one called “Black History Lessons”.

    • Jackie says:

      Interesting, I would never have thought of an online trivia game as a way to make money. Would it be through advertising?

  • Ryan Arnold says:

    Hi. I came across your site through google. Good ideas. But what if your not a writer and not computer savvy? I’m just a driver who would like mutiple streams and not depend on an up and down 9to5.

    • Jackie says:

      Well, you’re computer savvy enough to leave a comment on a blog, so I wouldn’t say you’re not. But, I would start by taking a look at what skills you have and how that could translate into something useful for others. For example, what kind of driver are you? Are there challenges that new drivers commonly experience? Maybe you could write an ebook or create a series of videos about that.

  • Keva says:

    Information is to old to be useful however I hope it works for someone else.
    As for my situation: I’ve got 9.00 in the bank 2 quarters in my pocket & I’m willing to work so far I’ve found survey companies that just wanted access to the bank accounts (bad doings) and no profit.
    A lot of people just can’t write well enough to make money at it.
    Passive income is just not really around for people like me who no

  • Jackie says:

    Hi Keva, it looks like your comment got cut off, but you’re right that a lot of the ideas above do either require the ability to write or a little start-up money. Passive income takes time to build, too. You may be better off looking for a part time job in the meantime, but I’d also try to analyze the things you know how to do to see if there’s a way for you to bring in money that way.

  • Great job on your article! I fully agree with you that creating a passive income is rarely a passive process.

    It takes a lot of work to set up in most cases.

  • Darnella says:

    Very good information, I’m looking for different ways to make passive income online and you give some very good points. I like how honest you are with your answers. It is a lot of work just getting started trying to find your niche, there’s so much information online. Keep up the good work.

  • Tarence Wade says:

    There are some really good and interesting links up there. Thanks for sharing and good luck with your own passive earnings. I am most interested in online passive income personally.

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