Make Money Online by Creating a Passive Income

The idea of earning a passive income can be a little confounding, and it all depends on how it’s framed. People will point to the residuals artists earn as passive income, and that’s accurate. However, to earn those residuals, you have to either write a hit song or book a part on a TV show. The effort leading up to those accomplishments isn’t passive by any definition.

Is passive income a reality? And how hard do you have to work before seeing any returns? It’s my belief that a passive stream of funding doesn’t come to fruition until you’ve laid a strong foundation for that business model. If you’re eyeing this type of income as a means of making easy money, expect to be disappointed. No one who created his or her own wealth made it happen through minimal work and hoping for fast cash. Mentally playing with passive income ideas is all well and good, but doesn’t lead to money unless you start putting in effort.

That said, you can definitely put mechanisms in place that will bring in money while you work on other things. It takes a calculated effort, but the tools are available to all of us. In many cases, you can generate an online passive income without having to invest anything but time. Better still, there’s a passive income option for just about every skill set.

If you’d like another source of revenue that doesn’t force you to clock in and out, here are seven methods I’ve either tried or seen employed. If you can figure out how one of these tactics might fit into your life, you just might be able to bring in money while you sleep.

1. Blogging

Starting and making money off a blog is both the easiest and hardest thing to do. It’s the easiest in that you could probably launch a blog in the time it takes me to finish writing this sentence about launching a blog. It’s the hardest because monetizing your site and actually making money online takes a lot of work and even more luck.

How does your blog make money? It all depends on the content you’re creating. Let’s say you have the most basic blogging model, writing stories about your trials as a new parent. You have a free website, a simple format, and you write one or two short posts each week. How does this blog, currently titled Three Cheers for the Child Rearers, bring in revenue?

One way is selling ad space. For this to work, your blog needs to be popular enough for the traffic to get advertisers’ attention. This model works for a lot of people, but you’ll have to stay motivated and create excellent content for a while before it pans out.

Linking to other products and sites might bring in money a little more quickly. Vendors will give a kickback when sales come directly through a link on your site. As long as an affiliate agrees to work with you, you might be able to see some earnings while only having a few subscribers.

Last on our list of blog-based passive income ideas is charging for memberships. Again, this requires that you create a blog people want to pay for. If your parenting tips are exceptionally illuminating, or the videos you post are unbelievably cute, some people might be willing to pay a monthly fee for access. A better way to get members is by offering exclusive mailings, live chats, and giveaways. No matter what, the content needs to be good.

There are other ways to make money online as a blogger, but we’ll stick to the options above for now. However you plan to earn, your blog has to be good. Before you buy a domain and start envisioning dollar signs, make sure your idea has legs.

2. Membership Community

Before the internet, people exchanged information in person. This might come as a shock to you, but some people still engage in that kind of discourse. Crazy, right?

One of the difficulties of starting an information service online is rising above the white noise. There are far too many blogs and services living on the internet, making it hard for new voices to find an audience. If you try to keep your service inside a local community, you eliminate a lot of competition while becoming more targeted in what you offer.

Boiled down, a membership community is a fee-based group that provides members with something they need. These look different in different communities; if you live in a big city, the group could focus on urban development, local political issues or youth programs; in a rural area, the focus could be on agriculture or growth planning.

Members would pay for information and possibly some kind of training. You would organize the meetings, bring in speakers, make the service worthwhile and collect a commission. There would be lots of coordinating and planning before you saw a dime, but a good communal program can lead to lots of members and multiple chapters. And, in theory, you can handle a lot of the preliminary work during the lunch break at your normal job.

3. eBooks

Did the blog option pique your interest, but then you lost steam when you thought about writing two posts a week? Writing an eBook might be the solution.

It’s fairly common for blogs, successful or otherwise, to turn into digital books as the writers get tired of making weekly entries. Of course, selling an eBook brings the same competition issues as starting a successful blog; there’s no shortage of online manuscripts waiting to become the next viral piece of literature. The upside is that an eBook requires less upkeep. You’ll have to work hard creating the content, then you get to throw it online and see if anyone bites.

We live in an interesting time for authors. Digital books have changed the way people consume literature, and self-publishing makes it so writers can potentially make more money selling books for a couple of dollars online than for five times as much in a bookstore.

Again, your success in this medium will depend on the quality of your ideas. Just because you can write and publish without anyone’s help doesn’t make it easy to create a work people will love. Write about a subject you understand and feel passionate about. Once you have a product, start by pitching it to friends and relatives to see if it picks up steam.

The best eBook in the world might make $.75 in the first year. If you have faith in your concept and abilities, keep at it. If you follow through and your book starts getting attention, you could end up with more passive income than you know what to do with.

4. Building and Flipping Websites

Maybe creative writing isn’t your forte. Maybe you write in code that computers appreciate more than people do. If this is your world, an online passive income is within your grasp.

Strong websites with steady traffic attract investors. If you can build a good site with a quality service, or you have a knack for marketing in the online arena, the internet has an industry built especially for you. There are even websites that enable people to buy and sell domains full-time.

I’m a big fan of business investing, and this option allows you to invest in all types of companies from wherever you have WiFi. You can invest in an online space, spruce it up a little, and put it back on the market. If you know what you’re doing and can read the market, good websites are selling for thousands and thousands of dollars.

If you want to stick to just buying and selling online businesses, there’s plenty of money to be made. If you want to get in on the ground floor with digital companies to help build their e-commerce and digital marketing, you can drive up your earning potential significantly. It all depends on how passive you want this income to be.

5. Online Vending

Selling physical products online is easier than most people think. Aside from blogging, this might be the most widespread version of online passive income. In addition to all the platforms on which people can sell, there are an infinite number of things that can be sold.

A simple first step is to head to eBay and sell things you have or make. If you’re crafty, you can start an Etsy page and build a small business that way. If you want to combine online vending and blogging, you can start a unique website full of information and items for purchase. If you don’t want to plan a yard sale but have a lot of stuff you don’t use, online vending is a financially rewarding way to deal with clutter around the house.

For those who don’t have personal possessions to sell, the possibility for this type of passive earning is still very attainable. Lots of people make money as third-party vendors on eBay and Amazon. With the right connections, you can help a small company sell products online and then take a commission. You have to know who you’re getting involved with before diving into this business model, but there’s definitely earning potential.

A big part of online vending is connecting people with the product or service they need. Some people make money as online buyers, helping the less technologically savvy find things they need and get them at a reasonable price. If you consider yourself a pro at online shopping, put those abilities to the test and become an actual professional.

People buy everything online these days. Whether you have your own merchandise to sell or you’re looking to make money by aiding another seller, this market is ripe with opportunity.

6. Peer-to-Peer Lending

I like peer-to-peer lending a lot as an investment option. Lots of people have retirement accounts through these lending sites, keeping a portfolio of different businesses and watching their wealth grow over time.

For those looking for more immediate earnings, this market can also create a stream of revenue. Online lending provides all sorts of opportunities, and you have a lot of control over the terms of your investment. As far as passive income goes, this one involves a lot more risk than starting a blog, but chances of getting a return are much higher as well.

Investing in small businesses is an admirable way to spend your money, as is helping people consolidate other loans so they can get out of debt. You take a bit of a gamble when you invest in a fledgling company or someone with an unseemly credit score, but the P2P hosting sites make the creditworthiness of their borrowers known so you aren’t going in completely blind.

Your earning potential will depend on how much you have to invest and your tolerance for risk. If you want to lend $50, you have that option. If you want to bring in more money, you can invest more. With P2P lending as a passive income model, you kind of get to substitute dollars for effort. That said, you should definitely put some time into researching where you put your money.

If you fancy it, this kind of lending can be done on a local level as a means of bringing in passive income. You have to be organized and confident about who you lend to, but there’s no reason you can’t give a friend $100 and ask for $110 in return. Lending is one of the most passive ways to generate considerable revenue, which is exactly why this industry is one of the largest in the world.

7. Create a Service

There’s one type of passive earning that requires a tremendous amount of effort at the outset and then allows you to bring in tons of money without lifting a finger. Some of you will disregard this option immediately, while others may see an awesome opportunity for making money. What am I talking about? I’m talking about starting a business.

I will be the first to admit that starting a business is hard. At times, launching your own company feels impossible. This path is not for the faint of heart and you won’t stand a chance if you don’t have tons of determination. You also don’t get to think about the passive income part until you’re well on your way. However, if you make it through the hard part, you get to happily reap what you’ve sowed.

How does the income become passive? Once your business grows, you’ll have more work than you can handle on your own. This forces you to pay employees to take things off your plate. So far, this probably doesn’t sound at all like passive income, but that’s because you’re not thinking about the endgame for this hypothetical company.

Let’s say you start walking dogs in your neighborhood. It’s a part-time job at first, but word spreads about your services and your schedule gets packed with dog owners in need. As opposed to turning down business, you bring in help. The new dog walkers get to work under your business umbrella and you keep 15-20 percent of the money they generate. Your business has grown and you’re making more money, but you aren’t walking more dogs.

As time goes on, other people looking for part-time work join your team. Added employees mean increased availability, enabling you to bring on more clients. The service grows and grows, and eventually, you can pay someone to handle the scheduling. Before you know it, you’re in charge of managing a few things and you can walk dogs when you like, but you otherwise sit back, collect revenue, and spend time with your family.

If this sounds crazy, look at any service app on your phone. Airbnb, Lyft and Uber are prime examples of companies where maximum effort quickly led to exorbitant passive income. The founders continued to work as CEOs, but within a few short years, millions of dollars were being generated by other employees.

“Taylor, are you advising me to start Uber as a means of making passive income?” No, dear reader, that’s not what I’m doing. But… kind of. If you really want to earn money while you’re sleeping, the best way is by starting something big. Start a service with potential for growth and then give it your all.

Like I said at the beginning, you shouldn’t do something if your goal is just to make easy money. You should work hard on a project or business venture because you believe in it. If you make good choices and keep your nose to the grindstone, that effort will turn into a steady revenue stream that might lead to early retirement.

The next time you hear about passive income, don’t get excited about the prospect of doing nothing and making money; get excited about creating something that will continue to pay you well after the work is done. Let your motivation be people reading your blog and appreciating your idea, or putting your design skills to use as you improve and sell a website.

If you take an active approach to earning, passive income becomes a real possibility. There are lots of different ways to make it happen, you just have to take charge.

Make it happen!

Taylor & Megan Kovar

The Money Couple