Anyone that comes over to Passive Income Now is surely interested in increasing/creating passive income. I’m personally very passionate about increasing my active income, along with my passive income. I understand that active income comes first. However, I do feel that your active income can be used as leverage to slowly create passive income.
For all of you reading this with a steady source of active income, this quick straight-to-the-point guide can show you how to create passive income:
1. Pick a source of passive income.
There are many ways to create passive income. It’s a matter of you choosing the right source of passive income for your situation (risk tolerance, capital investment, time constraints, etc.). Not every source of passive income will be ideal for your unique situation. Make sure that you don’t go in over your head.
For the sake of today’s post, I’m going to list the 3 most common sources of passive income and analyze them throughout:
- Real estate. You buy piece a property (condo, home, duplex, etc.) and you rent it out for a profit. Another alternative is to sell the property a brief period down the road in hopes of great home appreciation.
- Create an online product. This can be a simple audio file or an elaborate 50 page eBook on how to lose weight.
- Create a static blog. These have been on the rise lately. They range from static insurance pages to pages with layers of content.
2. Ensure you have the capital needed to begin.
Most reliable sources of passive income will require you to invest some capital ahead of time. The common misconception with passive income is that it is inexpensive to setup. While this can be true in many cases, it doesn’t always hold true. The amount of capital needed will vary greatly in every situation. There will be times where you’ll want to increase your portfolio and you’ll be willing to take on more risk (you invest in real estate). There will also be times where you have more time than money. This is where you can actually focus and pump out passive income products (eBooks, tutorials, etc.).
Now let’s revert back to our 3 common sources of passive income:
- Real estate. This is the most capital intensive passive income opportunity. A piece of real estate will cost you thousands of dollars aside from the actual property (lawyers, broker fees, closing costs, property taxes, etc.).
- Create an online product. The capital needed here varies depending on your skills. For my eBook I plan on outsourcing all of the aesthetics (creating a readable design, cool theme, etc.).
- Setup a static blog. The capital here is very low. You’ll simply have to pay your monthly domain hosting fees. You might have to spend some money to hire someone to update your page.
3. Free up initial time for your new source of passive income.
No matter which passive income route you decide to pursue, you’re going to have to invest some time upfront. Even a capital-intensive source of passive income like real estate investment will require a heavy time investment. you to research the market, speak with a real estate agent, look for the right property to invest in, find the tenant, review the tenant, etc. The time will add up. There is the possibility of outsourcing the whole process but then that cuts into your share of the passive income.
Once again we will go back to the 3 most popular passive income sources:
- Property investment. Will you have the time to deal with tenants? Before you even have a tenant in the property, you’re going to have to do plenty of work. You’re going to have to search for a specific property, research the area, meet with real estate brokers, meet with a lawyer, and meet with your mortgage provider. Then when you have the keys to the property, you’re going to have to search for a tenant, screen tenants, and check references. Then once the tenant is living in the unit, you’re going to have to be on-call if anything is to happen (or you can hire a property management firm).
- Online product. Can you handle customer service? You need to consider how you’ll deal with customer complaints and follow up.
- Static webpage. Do you have the initial time needed to setup shop? It will take a decent amount of time to get the website running. Once the website is running you may have to update it periodically.
Once you’ve taken care of the three above scenarios, you can focus on creating and maintaining your passive income. Good luck!