Top 17 Passive Income Ideas to Make Extra Money (2023)

Passive Income Ideas – Generating Income While You Sleep: This is the dream of everyone on the planet.

Upon completing this article, you’ll be well-versed in a variety of passive income concepts, enabling you to initiate the creation of residual earnings, thereby making money continuously for yourself.

The prevailing wisdom suggests that the typical millionaire cultivates seven diverse income streams, but this doesn’t imply they hold down seven separate jobs. More frequently, they’ve harnessed the potential of passive income to expedite their wealth accumulation.

Although the idea of lounging on a beach and witnessing a continuous flow of income may seem appealing, the reality is that constructing a consistent stream of passive income generally involves a considerable degree of effort. If it were an effortless endeavor, everyone would be pursuing it, wouldn’t they?

Nonetheless, if you’re prepared to undertake the challenge, don’t allow the idea of hard work to discourage you. There exists a multitude of practical approaches for establishing effective passive income, and many of these can be set in motion today. While passive income may not address all the challenges life presents, it unquestionably serves as a solid point of departure, particularly if your aspirations encompass attaining millionaire status in the future.

What Is Passive Income?

Passive income, often referred to as residual income, is the money you earn without active involvement in work. In contrast to the conventional exchange of time for money, as seen in 9 to 5 jobs, passive income revolves around money flowing in even when you’re not actively engaged in working.

Examples of passive income encompass investments in the stock market, real estate ventures, and income generated from online business endeavors.

Learn The Two Approaches to Generating Passive Income

Passive income doesn’t materialize out of thin air; it arises from existing assets. Regardless of the nature of these income-generating assets, there are essentially two avenues for their development:

Approach 1: Financial Investment

When you possess surplus cash, you can directly invest it in various opportunities. Passive income from such ventures typically demands minimal effort, effectively allowing your money to work for you and generate returns in the background.

Illustrative Examples:

Venturing into alternative asset classes
Renting out available space, such as basements, attics, or garages
Earning cashback on routine purchases
Engaging in crowdfunding for real estate
Initiating investments with a robo-advisor
Acquiring your inaugural investment property
Investing in dividend-yielding stocks
Participating in peer-to-peer lending
Constructing a certificate of deposit (CD) ladder
Acquiring a pre-established profitable blog

Approach 2: Time and Effort Investment

In cases where you lack a substantial cash reserve, the creation of passive income assets necessitates your active participation. Although there might be associated monetary costs, the primary investment consists of your time and effort, potentially resulting in more substantial long-term gains.

Illustrative Examples:

Delving into affiliate marketing
Commencing a YouTube channel
Launching an advertising agency
Crafting and marketing an online course
Establishing an e-commerce website
Selling stock photography online
Capitalizing on your vehicle’s income-generating potential
Write an e-book

Difference Between Passive Income & Active Income

Active income involves earning money in exchange for providing a service. It can take various forms such as a fixed salary, hourly wages, commissions, or tips. Essentially, active income requires trading your time for a predetermined monetary amount. Many individuals opt for this income model, which is a perfectly valid choice.

However, it’s crucial to recognize that active income usually comes with limitations on how much money you can realistically earn. This isn’t to suggest you should immediately resign from your job, but if you’re exploring innovative methods to generate wealth, here are some wonderful ways to create passive income.

Passive Income Streams Requiring Capital If you have surplus funds that you’re looking to invest, here are ten passive income concepts to contemplate.

1. Invest in Alternative Asset Classes

Fine Art Investment While cryptocurrency garners significant attention, if you’re risk-averse and prefer more stability, investing in fine art represents a viable strategy to potentially surpass the returns offered by the stock market in recent decades.

Past performance is not an absolute indicator of future results, but diversifying your portfolio with another asset class, particularly one like fine art that has historically demonstrated strong performance, can serve as a hedge against overvalued equity markets.

Companies such as Masterworks facilitate fine art investment without the necessity of owning or safeguarding million-dollar artworks. Much like a mutual fund, you can make long-term investments and receive dividends when specific art pieces are sold.

2. Rent Out Your Basement, Attic, or Garage

For homeowners, renting out available space on your property can be a lucrative way to generate mostly passive income. Neighbor.com enables you to rent out any space you own or have permission to lease, including your garage, bedroom, closet, RV pad, basement, warehouse, office space, empty lot, shed, and more.

Neighbor.com recommends a price range based on comparable listings in your vicinity, but you have the freedom to set your own rates. Users can request to book your space through the app, where you can review their profiles and communicate with them for additional information regarding their storage needs before accepting the listing.

It is the renter’s responsibility to cancel the agreement, and if you find a long-term storage tenant, you can earn passive income every month they store with you. As a host, you’ll be covered by Neighbor’s $1 million general liability insurance policy, and Neighbor guarantees automatic payments, ensuring you receive compensation even if your renter discontinues payments.

To gauge your potential earnings from renting out your home space, consider using Neighbor’s income estimator.

3. Begin Earning Cashback

Surprisingly, 65% of people are unaware that they can capitalize on cashback credit cards and rewards extensions to maximize their rewards.

If you are already engaged in online shopping, you might be missing out on a simple way to generate passive income by not harnessing cashback rewards.

Approach #1: Cashback Credit Cards Cashback credit cards provide a percentage, usually in the range of 1-5%, on your regular purchases. Some cashback cards offer varying rates depending on the spending category. For instance, a card might offer 2% cashback on gas and groceries and 1% on all other purchases.

Numerous cashback credit cards also include sign-up bonuses. These programs often require you to meet a specific spending threshold within the first 60 to 90 days of opening your account to qualify for the bonus. However, it’s essential to bear in mind that these offers are advantageous only if you consistently pay off your credit card balance each month. Accrued interest charges can rapidly erode any potential rewards.

If you already possess a cashback card you appreciate or prefer not to open a new credit account, there are alternative options for earning rewards on your everyday expenditures.

Approach #2: Cashback Applications or Browser Extensions Leverage deal-finding browser extensions.

4. Participate in Crowdfunded Real Estate

Real estate investment is often seen as the ultimate form of passive income. Ideally, you can own a property that generates income through rents and appreciates in value over time, delivering significant returns. However, traditional real estate investment often requires a substantial upfront capital investment.

Today, there’s an alternative way to invest in real estate without needing to invest hundreds of thousands of dollars in a single property. Real Estate Investment Trusts (REITs) are pools of capital from numerous investors managed by professional real estate investors. The funds in the pool are used for real estate investments. Investors contribute money to the REIT, the REIT acquires properties, and the returns are distributed back to the investors.

The best part is that you don’t need to be concerned with managing landlord responsibilities – it’s a genuinely passive income stream. While most REITs still require a significant investment, Fundrise allows you to access a variety of valuable income-generating assets with as little as $500 to start. Overall, it’s a straightforward way to diversify your investments and gain exposure to a market that may have been previously out of reach.

5. Commence Investing with a Robo-Advisor

Investing is often considered a fundamental element of any wealth-building strategy. In the past, having your investments managed by a financial professional was a service reserved for the wealthy. It was simply too expensive for the average person to enter the market.

Fast forward to today, and technology has made investing accessible to everyone. Instead of relying on an individual to manage your investments, robo-advisors, which are advanced computer programs, handle all the work – even if you’re new to investing and have limited initial funds.

For instance, Betterment is a robo-advisor that creates a customized, professionally crafted portfolio for you. You just need to provide some information about yourself and your long-term investment goals, fund your account, and it takes care of the rest.

6. Purchase Your First Investment Property

Investing in rental properties is one of the passive income concepts that can be quite daunting, particularly when it comes to finding tenants. Roofstock enables you to purchase properties with as little as a 20% down payment that already have tenants residing in them. This means you start earning income from the very first day of your investment, and you don’t even need to physically visit the properties.

Unlike Fundrise, Roofstock isn’t a real estate investment trust, so you’ll be purchasing individual properties.

This is a great approach if you live in an area where real estate prices are too high to realistically invest in, or you want to avoid the hassle and expense of traveling around the country to explore potential properties. Moreover, if you’re new to single-family real estate investing, having Roofstock guide you through the process is an excellent way to get started.

Once you acquire the property, Roofstock will connect you with one of its qualified property managers to handle day-to-day landlord tasks such as rent collection and maintenance scheduling.

Another option is to contemplate establishing your own real estate investment group. This approach allows you to collaborate with other small investors, either by pooling your resources or learning from one another. According to Joseph Hogue, CFA, “The common thread in all real estate investing groups is that members support each other in competing with major players to achieve the best returns.”

7. Invest in Dividend-Paying Stocks

Although it’s one of the oldest and less glamorous passive income strategies, investing in stocks that pay quarterly dividends offers a straightforward way to generate passive cash flow with minimal effort.

The concept is akin to the famous saying, “buy low and sell high.” Dividend stocks follow a similar principle, but with an added benefit: you receive a portion of the company’s earnings in the form of dividends, just for owning the stock. When you hold these stocks, you earn money when the stock’s value increases and when dividends are distributed.

Consider an example with Colgate-Palmolive stock. Over the past seven years, Colgate-Palmolive has paid shareholders between $0.34 and $0.68 per share every quarter. So, not only can you expect the stock price to appreciate over time, but you’ll also receive income for each share you own.

8. Acquire an Already-Profitable Digital Business

If you’d rather skip the initial startup phase and acquire a business that’s already established and generating revenue, this is a viable option. Many people start blogs but lose interest before they reach their full potential.

Starting and growing a blog is a labor-intensive process, and it’s not uncommon for people to give up prematurely. However, buying an existing blog can be a more straightforward route.

Two well-known marketplaces for purchasing established blogs are Flippa and Empire Flippers.

Empire Flippers tends to offer more established and profitable websites and blogs for sale, with prices ranging from over $20,000 to more than $2 million. Most of these sites have multiple revenue streams, so you’ll take over a site that generates income from day one.

Flippa’s inventory may not be as prestigious, but you might discover hidden gems. It operates as an auction-style platform, allowing you to bid on the websites you’re interested in. Bidding can start as low as $1, and with some luck, you could acquire a pre-built blog for less than $1,000.

A word of caution: If you decide to buy a blog, it’s advisable to have some experience in running an online business. Blindly jumping into this venture is not recommended.

Passive Income Ideas That Require Time & Effort Investment

If you’re willing to put in some effort and invest your time, the following ideas can lead to a reliable stream of passive income, which might even exceed what you earn from your regular job. While there might be some upfront costs, the primary investment here is your time and hard work.

9. Affiliate Marketing with a Blog

Affiliate marketing is a method of earning money by promoting other people’s or companies’ products and services, receiving a commission for each sale you generate.

Imagine you want to earn a commission when someone purchases a mattress online. Most mattress companies offer a 5% commission, and the average price of a decent-quality mattress sold on the internet is about $1,000. This means you would make $50 each time someone buys a mattress based on your recommendation.

Sounds promising, but how do you get started?

One of the most effective ways to start is by launching your blog. A blog is your own website where you can write about topics you’re passionate about. Successful bloggers and affiliate marketers often focus on specific niches or topics. For instance, in the mattress example, someone blogging about sleep habits, sleep hygiene, tips, and tricks would be an excellent affiliate for mattress companies. On the other hand, a sleep blogger would likely struggle if they tried to sell basketballs on their blog.

Having a blog also opens doors to various other revenue streams. Not only can you earn passive income through affiliate commissions, but you can also make money through advertising. Blogging is highly scalable, and you can continue earning residual income from posts that are several years old as long as people keep reading your content.

10. Start a YouTube Channel

While the rules for making money with a YouTube channel changed in January 2018, it’s still a viable option. You’ll just need to adapt your strategy accordingly.

In the past, almost anyone could monetize a YouTube channel. This involved allowing advertisers to place videos (ads) at the beginning of your content. When your videos reached a certain number of views, you’d start earning money.

YouTube is a popular platform with a wide variety of topics, including makeup tutorials, travel guides, unboxing videos, and almost anything you can think of. The vast user base means there are enough viewers to attract an audience even in niche or obscure topics.

11. Start an Online Advertising Agency

Consider the number of small businesses in your city. Many of them likely aren’t using social media effectively to attract more clients or boost their sales. While they may have a standard Facebook page, it’s often insufficient to make an impact in today’s crowded newsfeed.

This is where you can step in as the owner of a Facebook advertising agency. One of the key advantages of this business model is that once you’ve set up a client’s advertising campaigns effectively, there’s minimal ongoing work required on your part. Apart from brief daily check-ins, it’s a relatively hands-off business model.

Even with limited experience, it’s possible to learn the art of Facebook ads. Almost anyone can pick it up and secure their first client within a month.

Most Facebook ad agencies, even one-person operations, usually charge a flat monthly retainer, typically in the range of $1,000 to $2,000 per month per client. This is in addition to the budget allocated for the ads themselves, which goes directly to Facebook.

As you onboard more clients and build a reputation in your area, your income can quickly rise. Eventually, you can hire an assistant to run your business as passively as possible.

12. Create and sell an online course

Perhaps you possess in-depth knowledge of a particular subject. You can develop an online course, teaching anything from mathematics to playing the guitar, and launch it on platforms like Udemy or Teachable. The advantage of this approach is that after the initial course creation, you continue to earn income each time a new student enrolls.

But how do you choose the right platform?

Teachable and Udemy are among the popular choices, each with its own strengths. Teachable offers more pricing control and customization options for your course but requires you to handle your marketing efforts. Udemy, on the other hand, provides access to its student base but comes with certain revenue-sharing and control limitations.

Creating a course is easy: You only need an email address to start. Upload your content: Seamlessly add videos, audio, presentations, images, and text. Customize it: Personalize your course with your brand, colors, logos, and more. Launch: Attract students and sell your online courses.

13. Build an e-commerce site

Operating an e-commerce site that runs 24/7, even while you’re sleeping, is one of the most enticing online passive income ideas. This business model has gained significant popularity in recent times, drawing many newcomers.

Setting up most e-commerce sites can be labor-intensive. However, once you establish an effective system, maintaining it can become rather passive. Here are the primary types of e-commerce sites that are commonly pursued:

Selling your own product: You either manufacture or source your own products.

Pros: Complete control and higher profit margins.

Cons: Requires substantial work and often significant capital.

Selling other people’s products: Source goods from one or multiple companies.

Pros: Access to a wide range of products at wholesale prices.

Cons: Requires extensive effort and challenging price competition. It may be challenging to differentiate yourself.

Dropshipping: When a customer orders from your site, the manufacturer handles shipping.

Pros: No need to manage physical inventory, and it involves less work compared to the above models.

14. Sell your photos online

Ever pondered how you can turn your passion for photography into a source of income? Surprisingly, it’s quite straightforward.

One of the prime platforms for monetizing your photos is Shutterstock. Since its establishment in 2003, Shutterstock has disbursed over $500 million to its contributors. Thanks to its popularity and low entry barriers, this site can serve as a consistent source of passive income, regardless of your expertise level.

Simply create an account, upload your images, and start earning money every time a customer downloads your photos. The payment you receive per download varies based on the type of customer purchasing the image. If a customer with a monthly subscription downloads your image, your earnings will be less than if a customer pays specifically for your photo.

As you accumulate earnings over time, your potential income per image increases.

15. Put your car to work for you

Consider how frequently your car remains unused—during travel, vacations, or your typical workday.

You have two choices: 1) let your car sit idle and depreciate or 2) leverage it to generate passive income.

Rent out your car with Getaround Through Getaround, you can potentially earn thousands of dollars annually by renting your car to others when you’re not using it. The average annual cost of car ownership is nearly $9,000.[1] Renting your car via Getaround allows you to recoup some, if not all, of that expense.

As a Getaround car owner, you enjoy dedicated parking in prime locations, a $50 monthly driving credit for renting vehicles, and $1 million in primary insurance coverage.

Your rental earnings accrue monthly, with payments disbursed on the 15th of the subsequent month.

Advertise with Wrapify Wrapify is an app that pays you for displaying brands and businesses on your car. According to their website, drivers can earn $400 or more per month.

To get started, download the app and track your driving. Once you meet the minimum requirements, you’ll receive notifications when a campaign is available in your area.

Rent your RV with RVShare

RVShare offers RV owners the opportunity to rent their unused recreational vehicles to travelers. To begin, register on the site, create a free RV listing, and respond to booking inquiries.

Earnings depend on factors such as the season, the type of RV you’re listing, and the rental duration. However, the site states that RV owners can make up to $40,000 annually by renting out their RVs through the platform.

16. Write an eBook

If you have a passion for writing but want to avoid the technical challenges that can come with blogging, consider creating and self-publishing your own eBook. eBooks are typically shorter than traditional books, making them easier to write and sell.

The most successful eBooks are often non-fiction, such as how-to guides and informative pieces on specific topics like fitness or graphic design.

Amazon Kindle Direct Publishing (KDP) is one of the most straightforward platforms to get started with. Publishing your eBook takes just a few minutes, and most books appear on Kindle stores worldwide within 1-2 days. With Amazon KDP, you can earn up to 70% royalties for each sale to customers in most countries, and you have the flexibility to set your own prices and make changes to your books at any time.

If you want to save time, avoid hassle, and start earning money from your eBook sooner, consider taking an online course. These courses typically cover selecting a topic for your eBook, crafting an engaging story, and effectively marketing and selling your book.

17. Sell your location data

This unique passive income opportunity requires no effort or investment. An app called Tapestri offers to pay you for your location data. The app claims that almost every other smartphone app collects data on users, often much more data, without offering any compensation. Tapestri, however, is willing to reward you for your data.

Earning with the app is straightforward. Simply download Tapestri, grant it permission to track your location, and that’s it. The data collected by Tapestri is entirely anonymous and cannot be linked back to you individually by the brands purchasing the data. Companies use this data to better understand their target customers, such as their shopping habits, destinations, and preferred shopping days.

Tapestri suggests that users can earn up to $25 each month by having the app installed and active, with no additional effort required. The app also offers optional survey opportunities if you’re interested.

Find and download the Tapestri app here.

Choose the Best Passive Income Stream for Yourself

Ultimately, you can opt for a combination of these passive income ideas or experiment with them all.

The right path for you depends on your short- and long-term goals, available time, income targets, and your willingness to invest effort.

Real estate is a commonly recommended path, with investor Louis Glickman famously stating, “The best investment on earth is earth.” While real estate can be a fantastic option, it does necessitate a substantial initial investment. Whether this passive income stream is suitable for you depends on your current financial situation. You may prefer to start with an investment strategy that allows you to build funds until you have a significant sum to invest in real estate.

Some individuals may be drawn to passive income ideas that offer them greater control. Many entrepreneurs enjoy the idea of creating something, whether it’s a blog, a YouTube channel, an online course, or an e-commerce store. While these ventures may not be entirely passive initially, they can be transformative and potentially lead to substantial wealth and fulfillment.