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15 Ways to Generate Passive Income

Passive Income

Who could deny the desire to earn income without working?! Passive income is money earned that does not require you to provide a service or exchange your time directly to earn. Most passive income sources will require an initial time investment to get the business started, but once it is created and operational – you should continue to earn money with little to no additional work.

Depending on your interests, your abilities, and the amount of time you have to dedicate to the initial startup of the passive income-earning activity, you have several options to consider. It is best to weigh the pros and cons of each as it relates to your lifestyle. You don't want to invest a lot of time, money and energy into something that will cost you more than you have to lose.

Here are several options to consider on the road to generating passive income:


If you buy or own a property, either residential or commercial, and rent the space to someone else to use, the rent you earn is considered passive income. Rent is not perfectly passive, because there are maintenance and management costs that need to be considered. Still, there are several property investments you could make that will generate different levels of income and you can even use your home property as a way to earn money.

1) Residential apartments and homes – You can start by renting additional space or rooms in your home or you can invest in an additional property which can be leased to tenants. College students, single people and the elderly are often looking for affordable housing. It can take a significant amount of your time and money to make repairs and keep up with the overall property management. If you are handy and can do much of the work yourself, you may generate a decent profit. You can also invest these profits into other buildings for rental. Hiring a good property management company (a trick in itself) is often how people turn rentals into passive income investments.

2) Commercial property – Commercial properties are often sought out by small to mid-sized business owners looking for work space in a public location. Depending on the set up of your property, you can allocate multiple spaces for single-person offices or rent the entire building to a business entity. Many business owners seek long-term leases as once they have established a presence in one location they tend to remain there while business is good. This option may be out of reach for most people due to size of the loan required to purchase commercial property, but it doesn't hurt to keep your eyes open for opportunities.

3) Self-Storage Units – You can invest in a storage building that offers multiple units allowing the public to store their extra belongings. If you have additional space in your home, garage, or an additional piece of property, you can allow people to store their items for a monthly rate. You will need to ensure you can offer protection from damage and theft if you wish to earn rather than lose money.

4) Parking Lots – If you have parking space near an event venue, you can often earn money by charging people to park. In general, all you need is the sufficient parking space and a sign directing people to your space. You can set rates depending on the proximity to the venue or the event location. There may even be long-term rental income generated when your space is close to a business where employees need viable parking options on a daily basis.

Important - In all cases, you should find out about your local laws, such as zoning laws, that may affect what you can and can't do with regard to all of these activities.

Online Businesses

Owning an online business offers a variety of opportunities to earn more money with passively earned income. For many, an online business is the perfect option largely because startup costs and overhead expenses are low. To see for yourself whether you could afford to start an online business, do your research and use Vertex42's Business Startup Costs template. There are several avenues for generating passive revenue from online businesses:

5) Membership sites – Internet users who would like access to the information on a membership site pay a subscription or one-time use fee. Membership sites are ideal for selling information that users can read or view online; or for selling information your customers can download and save to their computers or electronic devices.

6) Advertising – If your blog, website or newsletter has a lot of readers, you may make money offering advertisement space to companies who would like to get their message in front of your readers. Advertising through Google AdSense is one of the easiest ways to implement advertising on your site because it looks at the content of your page and automatically places ads that are related.

7) Revenue sharing – Using sites like or, you can write and publish articles that offer the opportunity for revenue. These sites will place pay-per-click style advertisements on your blog posts, and you get a portion of the revenue generated for your posts. Doing things the right way may not be as easy as the websites make things out to be.

8) Affiliate marketing – You can join an affiliate program and market a product online to earn commission. If the articles or website you create generate enough traffic, that work can sell over and over again without additional involvement on your part. Website owners often include affiliate marketing as just one of the many different revenue streams. These days it is important that what you are publishing online is unique and valuable in itself. If all you are doing is saying the same things about the same products that everybody else is marketing, it's probably not going to work out for you.

9) Expertise Writing – If you have a specific talent, knowledge, or expertise in an area, you may consider writing about it in articles or e-book form. You can earn continued residuals by marketing your articles to relevant websites and blogs. You can also market and sell your e-book online to generate ongoing passive income streams from writing.

10) Drop Shipping - Drop shipping is method used by many online retail stores to avoid having to deal with inventory and handling product shipments. With drop shipping, you as the online store owner would be making sales and processing payments (both of which may be done automatically) and the wholesaler handles the shipping of the product to the customer.

11) Sale of Electronic Goods - The process of selling electronic goods can be almost completely automated, making the sale of documents, e-books, music, videos, and whatever else can be delivered via electronic means a way to generate passive income. Some of the main costs involve initial creation, marketing (and everything that might entail such as creating and managing a website), and ongoing customer support (for problems with purchases, downloads, or using whatever it is you are selling).

Owning a Business

12) Purchasing a Business - This isn't something you just decide to do one day. But, if you set up a business correctly, almost any business can generate passive income for the owner.

As the business owner, you can ensure your business doesn't require your direct involvement to perform its day to day operations. It involves employing a manager to oversee the operations and keep everything running smoothly; employees to provide the service or make the products your business sells; and, if necessary, a marketing team to ensure longevity with incoming customers. When your business operates efficiently, each of your employees are paid, the operating expenses are paid, and whatever is left is your profit as the business owner.

Franchises often offer the opportunity to set up an already-established and proven successful business format, but will require a high investment cost upfront. Depending on your financial situation, you can invest in an already-successful franchise operation and make smart hiring choices to generate a substantial profit, and even launch a new career path for the future.

Better Banking and Investing

It's difficult to find a more pure means of generating passive income than earning interest, dividends, and capital gains. The methods you use for saving and investing your money can be analyzed to find more effective ways to earn larger sums of money. Here are just a few ideas to consider.

13) Higher Yield Accounts – Shop around online and offline for savings accounts, money market accounts, and CDs that offer a higher interest rate on the money you already have. You can use Vertex42's Savings Interest Calculator to find out how fast your savings may grow. People often put their emergency fund into one of these tyes of accounts.

14) Take Advantage of a 401(k) Employer Match - It is difficult to find a better return on investment than you can get with an employer match in a 401(k). A match usually means that the employer matches your investment at 50% or 100% of what you put in, up to some maximum limit. There aren't too many other ways to earn an immediate no-risk 50% return on an investment. Try Vertex42's 401k Calculator to run some numbers for yourself.

15) Dividends – When you invest in a public company that offer dividends (such as utilities, energy companies, and some retail companies) you receive a portion of the company's profits that it pays to its shareholders. Although the value of your investment will also increase or decrease with the share price of that company, the dividend yield may stay more constant.

About the Authors

This article was co-authored by Debbie Dragon, a professional freelance writer, and Jon Wittwer, owner of

Disclaimer: This article is intended for educational and informational use only and not as professional financial advice.


1 comment… add one
  • i am in the lng project area and i want to start up passive earning business, i need help


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