What is Passive Income?

Have you ever wanted to make money in your sleep without doing any real work? Avoiding the 9 to 5 rat race and living life on your own terms.

That’s essentially what passive income is. Passive income can give you the financial freedom (and the actual freedom) to do whatever it is you damn well please.

What is Passive Income?

According to Investopedia, passive income is “passive income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.”

In order to get passive income, you’ll usually have to make an upfront investment using either your time or your money. For example, if you want to earn passive income from dividend stocks, you’ll need to invest your money. If you wanted to earn a passive income from selling eBooks, you’d need to invest the time upfront to create the content (but usually there’s no financial investment involved).

Passive income could be income from:

  • Dividend stocks
  • eBook royalties
  • Rental property
  • Laundromat
  • Vending machines
  • High yield savings accounts
  • Selling digital files on Etsy
  • An online course
  • REITs (Real Estate Investment Trusts)
  • Storage unit rentals
  • Blogging
  • Starting a YouTube channel
  • Create and sell apps

Dividend Stocks

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Dividend stocks are a great way to earn passive income without much work upfront. Before you invest, come up with a plan. What’s your ultimate goal? To make the most money with the least amount of risk? Or are you comfortable taking big risks for a large payout? Are you looking to earn both dividends and hold stocks for long-term growth? Figure out the answers to these questions and start doing your research on what dividend stocks to add to your portfolio.

eBook Royalties

eBook royalties are a great source of passive income and they’re perfect for the people who don’t have a lot of cash to invest. Come up with eBook topics that you’re sure would sell (and that can help people in some way) by doing a bit of research. Check out Amazon.com and see what its top-selling eBook topics are. Whether you decide on fiction or nonfiction, it always helps to check out the competition. Figure out what’s selling and try to emulate that by creating new content on the same topics. Once you’ve got enough books published, you can start seeing a decent stream of income pouring in every month.

Rental Property

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This is another type of passive income that’s going to require a cash investment. Getting started with real estate generally means investing thousands of dollars to buy a rental property. Consider closing costs and other fees associated with closing on a house. Then, there’s the time it takes to screen tenants and find the right one that will make you money rather than cost you money.

You don’t want tenants in your unit that are going to destroy it, be late with rental payments, or cause other unnecessary headaches. If you truly want to your passive income stream to be passive, you might want to consider hiring a property management company to manage the property. That helps you avoid getting calls at 2AM for an overflowing toilet or a busted pipe.


A laundromat can generate passive income for you because it literally requires no management. This is one passive income stream that would require you to invest a few thousand dollars. You could consider purchasing an existing laundromat to cut down on costs, but if you’re going to open up a brand new laundromat, make sure it’s in a high-traffic area where there’s a need for one. You don’t want to open one smack dab in the middle of the suburbs where people likely have their own washer/dryers. Also, consider the cost of buying the machines (which can be pretty expensive). Think about different ways you can make money within the laundromat aside from the machines (such as vending machines).

Vending machines

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Speaking of vending machines, they’re a great source of passive income, especially when placed inside of office buildings and existing businesses. If you have a retail business of your own, consider adding vending machines to generate passive income. You could also place vending machines inside other people’s businesses like my landlord used to do. He owned a vending machine business and that’s the main thing they did — added vending machines to other people’s businesses.

High Yield Savings Account

Putting your money into a high yield savings account and generate passive income for you if you’ve got a decent amount of money to contribute. While there’s no minimum for some accounts, others have account minimums. If you want to see real returns with a high yield savings account, investing a few thousand is the only way to really make it worth your while. Otherwise, you won’t see much of a return.

Selling Digital Files on Etsy

If you can design documents like planners, business documents, resumes, or any type of file someone can download and use in their personal or business lives, you can generate passive income using Etsy. My sister does this in her spare time and generates a nice passive income, sometimes hundreds of dollars in just one day. Even if you’re not a graphic designer, you can make money on Etsy by purchasing elements from other designers to use for your digital files. Figure out what the top-selling designers are using and what their top-selling items are. Then, create your own digital files and start generating income passively.

Online Course

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Online courses are becoming wildly popular and for good reason. People are always going to want to learn how to do new things and if you’ve got specialized knowledge or skills that can help them attain their goals, whether it’s starting a garden, learning to meditate, or learning a new language, you can make money from teaching others. Figure out what it is you’re good at and use that to create a course. As with anything, do your research and find out what the most profitable topics are. Then, create your own course without copying someone else. Find a way to create your own twist on a topic or create a sub-niche of that topic.


Real estate investment trusts are similar to stocks. But these trusts invest in different income-producing properties that often pay higher dividends than stocks alone. Real estate is usually a sound investment because it only appreciates in value. And if you don’t have the funds to invest in actual physical real estate, REITs are like the next best thing. REITs do well when the real estate market is doing well, so consider that before investing in them. Do your research and determine the best REITs for you.

Storage Unit Rentals

Storage unit rentals can be a great source of passive income, but this is one that involves a large investment up front. You need to have the money to purchase a commercial storage unit complex or the money to build one. But if you want to do this on a smaller scale, you could always rent out extra space you might have in your garage or shed. This can help you cover your monthly expenses, like rent or part of the mortgage payment.


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Tons of writers are using blogging as a way to generate passive income, but you don’t have to be a writer to use blogging as a source of passive income. You could always hire people to write articles for you or write them yourself. As long as you can string together decent sentences and they’re at least informational in nature, you can write your own blog posts. Most bloggers use ads and affiliate marketing to generate their blogging income. If you can review other people’s products or promote them in a non-salesly, engaging way, you can earn affiliate income from blogging. You’ll need to sign up with an affiliate company like Clickbank and start searching for affiliate products that fall in line with the content on your blog. Or you could go directly to the product owner and sign up with them as an affiliate.

Starting a YouTube Channel

YouTube can help you generate passive income if you can create and edit videos that people want to see. You could create comedy videos, informational videos, or videos of you playing and beating popular video games. You’re not limited to those ideas. You could also create travel videos, tutorials, or document your life if you have an interesting job, hobby, or family. There are tons of ideas. Be creative and engaging and you could make a few hundred (or if you’re lucky thousands) of dollars every month. For the even luckier few, you could make $1 million from putting ads on your videos.

Creating and Selling Apps

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Got an idea for an app you can sell on the App Store or Google Play store? These days, you don’t even need to know coding to create your own app. There are all kinds of software programs that allow you to make an app pretty easily, like ClarisSalesForceBuilder, and Skuid. Come up with an app idea, create it, and you can sell it passively without much more work.

There are tons more ways to earn passive income and pretty much anyone can start generating passive income.

How Can You Make Passive Income?

Generating passive income can be accomplished in just a few steps. As long as you’re committed to investing the time or the money to your passive income stream, you can start making money in your sleep in just a few short weeks.

1. Figure Out What You’d Be Good At.

If you want to generate passive income, consider your skills and knowledge and decide which passive income streams you might make the most money at or offer the most value. If you’ve got writing skills, maybe creating an online course or writing ebooks is the best choice of passive income for you. Or if you’ve got an eye for design, maybe you’d be better at creating digital files to sell on Etsy. If you’ve got a background in finance, maybe investing in stocks or REITs is the better option.

2. Start Your Research.

Before you dive headfirst into any passive income stream, do your research. I can’t stress this enough. Many people jump right in with the expectation that things will just fall into place for them without needing to know much of anything about that particular income stream. Research how much of a time or financial investment you’ll need to make, how to be successful at it, and how long it’ll take to start generating income.

For example, with dividend stocks, you’ll need to invest a pretty significant amount of money to start seeing real returns. In my Facebook stock investing group, people that generate hundreds of dollars a month using dividend stocks have invested thousands of dollars. One guy invested more than $26K into dividend stocks and he’s making a few hundred dollars per month.

3. Consider the Risks.

With some income streams, such as investing, there’s a certain amount of risk involved. That means, there’s no guarantee that you’ll make money and, in fact, you could end up losing money. That’s because there’s no right or wrong way to invest. There’s no straight, sure path to success. But you can increase your chances of making money by doing thorough research and by following the advice of people who’ve done it before or who are currently doing it with success.

4. Start Earning Passive Income.

Once you’ve done your due diligence and considered the risks of your investment in a passive income stream, you can start earning passive income pretty quickly, depending on what you decide to do. For example, if you’ve decided to start blogging for passive income, you can start creating your posts today and have at least 10 solid posts up and published within a matter of days. Or if you’ve decided on dividend stocks for passive income and you have the money, you can start researching the stocks that pay out the highest dividends and come up with a plan to help you earn dividends every month (or even every week!) if you’re strategic with your plan.

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