Let’s face it, 2020 set a lot of folks back financially which isn’t giving the best of starts to 2021. While there are a lot of jobs starting to open up as the country begins to reopen back up, that ultimately means that there will be a lot of people looking to fill those vacant positions. Even in that case, we aren’t quite to that phase yet and a lot of us are still under lockdown, out of work, or relying on government assistance to get by during these turbulent times. So, how about passive income?
What is passive income?
Passive income is comprised of regular earnings that come from a source other than a contractor or employer. The IRS (Internal Revenue Service) states that passive income comes from two sources: a business that one doesn’t actively participate in, such as being paid stock dividends and book royalties or a rental property.
Passive income can be a fantastic way to generate a little extra income, especially with the pandemic man-handling the current job market of many Americans into a tailspin. Passive income helps people to make ends meet in case someone in the family suddenly becomes unemployed, ill, or even if they need to take some voluntary time away from work.
4 passive income ideas for building wealth
There are a ton of ways out there to earn a little extra money on the side. Some are very simple with small payouts like filling out surveys and answering questions about products and even yourself. These are generally more trouble than they are effective, but they do work. Some people even chose to gamble at online casinos. A lot of these online gambling sites offer some free cash to get started (that you have to use on their games of course) and they payout real cash. Although this isn’t legal everywhere and the risk is extremely high, just like the reward. Don’t worry though, the list that is comprised here is nothing like these 2 examples – and instead these will provide a much more cynical and safer alternative to earning a passive income from home.
1. Rental income
If you have a little money to invest, sinking it into a few rental properties is a solid way to earn some passive income. Be warned though, rental properties often come with a ton of hidden work.
Pro-Tip: If you want to have successful rental properties, consider the following:
- How much return do you want back on the investment?
- What are the property’s total costs and expenses?
- Are there any financial risks of owning the property? If so, what are they?
Risk: There will always be risks, but it’s up to you to weigh out which ones to take and which ones to give a wide berth. Buying a clunker property may leave you sinking more money into the project, leaving you hoping to break even at best. Not to mention if renovations take you months to pull off, you could easily end up losing money.
2. Affiliate marketing
Type make money from home into your search online and get ready for the tons and tons of videos to come through from self-made financial gurus telling you how affiliate marketing has all the answers to your problems. What if I told you that they were right? Well, they could be right, but that’s up to you. Affiliate marketing is a lot harder than it looks and there is a lot more to it to work successfully. For instance, you will need a good product, an email funnel, and a loyal base of people to pitch your product to.
Opportunity: Most programs online give you a small percentage so consider one of 3 approaches.
- Big Money/Big Risk: Choose the most expensive product and go for it. It may take some time to finally make the sale, but when you do, you could end up making a few thousand bucks while you sleep.
- Fast n’ Cheap: This method involves choosing a cheap product and pitching it to a ton of people. Sell 1000 flashlights for 1$ each, and you made a quick thousand. It’s easier to sell cheaper items but takes longer to net big money.
- Middle approach: Shoot for the middle. Find the average products that you should be able to push now and then.
Risk: If you don’t have a solid group of potential customers to work then you probably won’t make a good affiliate marketer. If you have any type of social media following on any platform, that’s half the battle. You can eventually make money when you sleep, but it doesn’t happen overnight.
3. Create an app
I know what you’re thinking, create an app? You don’t need to be a technical genius to create an app (but it does help) you just need a good idea.
Opportunity: If you can come up with an app that wasn’t done before but has good useability then you could be on to something. Even if you can’t think of anything new, there’s no shame in doing another app’s idea better (if you can). Just be sure not to get yourself in any copyright trouble if you start experimenting with ideas that aren’t your own.
Risk: If you take a drive what are some places you’ll likely pass? A bank? A gas station? Some restaurants? And why is that? Because nearly everyone uses money, uses moto transportation, and has to eat. So, with everyone having smartphones, there are a ton of apps out there. Long story short, it’s a saturated market- but it can work if you have the next big idea.
4. Rent out your home short-term
If you have the extra space in your home and don’t mind a few strangers from time to time, renting out your home can be a great way to make some cash. Whether you have a beach house somewhere other than where you live, or you have a basement that you converted into a bed and breakfast, these are both ways to make money with that extra space you literally have laying around the house.
Opportunity: If you scout your tenants properly, this could be a walk in the park and a very easy project. There are a ton of apps out there that you can use for advertising and if your customers leave happy, word of mouth can mean big things for a business like this.
Risk: Tenants may destroy your property or be unruly drawing complaints from neighbors or family members, but as mentioned above, scout out your tenants as if you were interviewing for a babysitter. After all, it’s your roof, your house, your rules!