31 Legit Passive Income Ideas To Stop Trading Time for Money

I set out to write the best damn passive income ideas post on the Internet.

Because here’s the thing…

Most “passive income ideas” posts just repeat the same boilerplate ideas—open a high interest savings account, for example.

And yes, that will earn you a small amount of passive income, but my guess is you’re looking for something a little more substantial.

In this post, I’ll:

  • Break down the 4 types of passive income.
  • Share my own actual passive income streams.
  • Present other legit passive income ideas you can take action on today—and back those up with real-life examples.

Table of Contents

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The 4 Types of Passive Income

The allure of passive income is exciting. I mean, if the idea of making money in your sleep doesn’t get you excited, I’d check your pulse.

On top of that, passive income is important.

I’ll let Warren Buffett explain:

“If you don’t find a way to make money while you sleep, you will work until you die.”

I think we can all get on board with that.

So how can you get some that sweet, sweet passive income—or “mailbox money”—for yourself?

Here’s what you need to know.

In general, passive income is the money you earn from assets you control. (Assets are simply things that other people value; cash, real estate, physical goods, attention, etc.)

The drawback is assets usually take either time to build or money to acquire.

Here are the 4 types of passive income you can start working toward today:

the 4 types of passive income

1. Buy cash-flowing assets

This is the “make money with money” option. Under this category you’ll find options like dividend investing, business lending, real estate, and stuff like that.

It’s great—if you already have money to invest!

2. Build assets

Building something of value—say, a digital product or website that earns advertising revenue—is a viable path to passive income. These things take some time to create and market, but can run relatively passively often for years if set up correctly.

We’ll explore some examples of how I’ve done this and how other side hustlers have as well.

3. Share or sell assets

There are ways to make relatively-passive income renting or selling assets you control.

This could include extra space around your house, stuff you have collecting dust, or even the data generated by your phone (see below!).

4. “Reverse” passive income

“Reverse” passive income comes from cutting your ongoing monthly expenses. A penny saved is a penny earned, right?

Well, because of taxes on earned income, it’s actually better than that!

I’ll show you some of my favorite ways to earn some reverse passive income. No extreme couponing, I promise.

Ready?

Let’s dive in.

1. Earn Affiliate Commissions

I got my start in affiliate marketing back in 2004, and it’s been a significant piece of my revenue pie ever since.

How affiliate marketing works is I earn a commission for referring leads and customers to other products and services.

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My first affiliate business was a comparison shopping site for footwear. It helped people find the best price on their next pair of shoes, and earned commissions from Zappos and other footwear retailers when those people made a purchase.

Once the site was built, I earned these commissions whether or not I was actively sitting at the computer.

Here’s a look at my daily affiliate commission trend back in the day:

daily affiliate commissions

Even today, affiliate marketing is a really important revenue stream for me. This site (and yes, this post too) includes lots of affiliate links to products, apps, services, and software I think will be helpful to my audience.

Here’s an (over-the-top) example of a post monetized with affiliate links. Still, over its lifespan, it’s generated over $40,000 in commissions. From one post!

2. Write a Book

It’s never been easier to create a book of your own and put it up for sale on Amazon.

I received my first author royalties in 2012 and have added several more titles since then. It’s one of my favorite side hustles and one of my most passive income streams—write the book once and collect royalties for months or even years whenever it sells.

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Over my lifetime as a professional self-published author, my books have earned over $70,000.

lifetime author royalties

When you price your book between $2.99 and $9.99, you’ll earn a 70% royalty. Outside of that range, it’s 35%.

For every Kindle book you write, it probably makes sense to add paperback and audiobook editions. Thankfully, Amazon makes this incredibly easy with its KDP Print service and ACX, the Audiobook Creation Exchange.

Related: Free Self-Publishing Workshop

3. Buy Dividend-Paying Stocks

Investing for dividend cash flow has helped me get off the sidelines and into the market. (I’m the person who always thinks we’re due for a correction!)

My basic strategy has been to buy shares in companies with a long history of paying, and increasing, dividends. These include mostly name-brand businesses like Target, Chevron, AT&T, and Proctor and Gamble.

Because they’ve been around forever, they’re not likely to have explosive share price growth, but they do spin off consistent passive cash flow.

dividends as a passive income idea

Over the last few years, I’ve slowly built this up to over $2000 a month.

Check out a service like the modern brokerage M1 Finance to get started yourself.

You can trade stocks for free, or select one of their pre-built portfolios. (That’s an example of an affiliate link; I’ll receive compensation from M1 if you create an account.)

4. Sell an Online Course

In 2014 I created an online video course on Udemy about how to launch non-fiction Kindle books on Amazon. It earned $3500 in the first couple months, and has gone on to earn passive sales ever since.

The total is now over $25,000!

udemy lifetime passive income

All I have to do is respond to the (pretty infrequent) student questions or comments. Again this falls under the model of “create something once, and sell it over and over again.”

What could you teach? Consider what people already ask you for help with. What do you know more about than the average person?

With services like Teachable, it’s never been easier to create and sell an online course of your own. These can command premium prices ($100-$2000 or more) and allow you to help more people than you could with one-on-one consulting.

Over the years on The Side Hustle Show, we’ve seen people making money with online courses on just about every topic imaginable. Some of the more creative case studies include:

How will customers find you? If you don’t have an audience or traffic source, one method that seems to be working well lately is the YouTube-to-evergreen-webinar model, as described by Nate Dodson in this episode.

5. Sell a Digital Product

Several years ago, I decided to test selling a couple of my books on Fiverr. I figured it would be another interesting “buy button” platform to experiment with.

Sure enough, people bought them. And in fact they continue to buy them.

Fiverr definitely has not been a focus lately, but in total I’ve earned over $13,000 on the site since late 2013.

(Full disclosure: A good chunk of that revenue was NOT passive; I sold book editing and video website reviews in addition to my digital products. Over the years, Fiverr has shifted to become primarily a freelance platform, so the strategy today would be to create a compelling service offer.)

Similarly, Jodi Carlson reported earning over $5k a month selling digital activity guides for Girl Scout troop leaders. She’d started a blog documenting the activities she was doing with her scouts, mostly just as a reference for herself and other local leaders.

Before long, troop leaders from the other side of the country had discovered her site through Google or Pinterest. They emailed asking what other ideas she had.

That’s when Jodi began compiling her activity guides into PDF documents. She uploaded them to Teachers Pay Teachers, a site to buy and sell lesson plans, and made several sales in the first week.

6. Create Print on Demand Designs

This is a low-overhead, low-investment way to build a little passive income. In our house, Merch by Amazon is a fun little side business and generates around $60-200 a month for us.

How it works is you upload t-shirt (and now other product) designs to Amazon, and the e-commerce giant does the rest. When someone orders it, they’ll print it in the size and color selected, and ship it to the customer. You earn the spread between whatever price you set and the cost to print it.

Our best month was over $500 in profit, which I think we could hit consistently if we dedicated more time to creating new designs. (That hasn’t happened since the arrival of Little Hustler #2.)

Here’s an example of one of our designs:

For more on getting started with Merch by Amazon, check out Episode 216, in which my guest earned over $50,000 in profit doing this.

7. Collect Ad Money from YouTube

If you have over 1000 subscribers and meet a couple other requirements on your YouTube channel, you can enable Google’s built-in monetization.

Lately this passive income steam has been around $500 a month:

youtube monetization

This is the income stream I’m probably most excited about right now, because it feels completely new.

And to be sure, creating video content takes time, but once your videos are up there, they can earn passive income for you for years—as some of mine have.

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8. Buy Commercial Real Estate

Fundrise is a cool “alternative” way to invest in real estate.

They have several funds that operate like mini REITs or real estate investment trusts, where you’re buying a combination of debt and equity in a range of commercial properties they’ve bundled together.

You can start this passive income idea with just a $10 minimum investment.

fundrise homepage

Historically the company has paid 5-8% dividend yields. I’m about 6 years into my investments there and they’ve paid out every quarter so far.

(Of course there haven’t been any major real estate downturns that time either!)

9. Earn More Interest

BlockFi is my best new find of the year. When you deposit dollars, the platform converts them into stablecoins — cryptocurrency pegged to the US dollar. Then they pay you 8-9% interest on your account.

(Unfortunately temporarily closed to new account holders.)

blockfi for passive income

You can withdraw back to your bank account at any time and there are no minimums. They’ll even give you a bonus in Bitcoin—up to $250 worth—on your first deposit.

Compared to the interest rates elsewhere, this has been a huge win. For example:

checking account interest

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10. Make Short-Term Real Estate Loans

With PeerStreet and Groundfloor, you’re essentially helping real estate flippers with their acquisition and rehab costs, and earning 6-9% passive income on your investment.

peerstreet homepage

The big advantage over other peer-to-peer lending is the loans are backed by the real property so if the borrower stops paying, you have some recourse — namely foreclosure.

The loans are shorter term, generally 1 year or less, instead of 3-5 years.

PeerStreet is also currently only open to accredited investors, but Groundfloor is open to everyone and has much lower minimums.

11. Let Banks Give You Free Money

Credit card rewards are one my favorite passive income ideas because I earn them just from spending money like I normally would.

In our house, this stream is worth hundreds of dollars a year in the form of cash back, free Amazon gift cards, and travel.

The magic really happens when you take advantage of certain sign-up bonuses for new cards — earning the equivalent of 20%, 30%, 40% cash back or more in travel value or statement credit.

Here’s just a really simple example:

Related: Credit Card Rewards 101: How to Earn Free Cash and Travel by Spending Smarter

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12. Get Easy Cash Back

Aside from credit card rewards, I use several cash back apps to earn “reverse passive income” every time I shop.

Among those are:

  • Capital One Shopping – A free browser extension that helps you find better deals and coupon codes when you shop online, whether or not you bank with Capital One. Plus, you’ll earn rewards you can redeem for gift cards. Disclosure: Capital One pays me when you get the Capital One Shopping extension through my link.
  • Fetch Rewards – Scan your grocery receipts with the free Fetch app to earn cash back on 250+ brands. Not 100% passive but very painless.
  • DOSH – Link your bank and credit cards and earn automatic cash back at local participating stores and restaurants.

13. Share Your Data

While not a huge money-maker, this simple passive income idea could be worth $200 a year or more. I figured since I’m probably already giving my data away to “big tech” for free, I might as well sign up if someone wants to pay me for it.

For example, it took about 5 weeks to earn my first $10 worth of points on Surf—a free browser extension that pays you for sharing your online behavior.

surf rewards extension

Other passive income ideas in this category include:

14. Play the Substitution Game to Save Money

I recently switched to Mint Mobile, which runs on the T-Mobile network, for my cell phone service. When you pre-pay, it costs just $15 a month:

mint mobile

Compared to my old provider, Ting, and my even older provider, Verizon, this represents savings of $180-500 a year.

Similarly, if it’s been more than 2 years since you last shopped for car insurance, you’re paying too much.

Check out Insurify for a quick and painless comparison on car and home insurance. It’ll take just a few minutes and users report saving an average of $489 per year!

save on insurance with insurify

What other recurring monthly costs could you cut by negotiating with your service provider or by shopping for a similar service?

15. Refinance High Interest Debt

According to Nerd Wallet, the average household with debt is facing:

  • $6500 in credit card debt
  • $27,000 in vehicle debt
  • $46,000 in student loan debt

If you’re paying any non-mortgage interest right now, I would prioritize eliminating that monthly expense before exploring some of these other strategies. Take a look at our partner Credible to learn more about your options.

16. Buy a Rental House

Roofstock specializes in matching investors with “turnkey” rental properties across the country.

roofstock rental properties

A couple friends of mine have purchased several houses through this easy-to-use site. I like the diversity of REITs, but if building a real estate empire is your long-term plan, these guys will help you do it–one house at a time.

17. Buy Part of a Farm

Invest in America’s farmland with AcreTrader, starting with $5000 minimums. Since 1990, farmland investments have seen an 11.5% annualized return (according to the site).

acretrader farmland investing

AcreTrader crowdfunds the purchase of active farmland, and then rents it back to the farmers who operate it. Investors make money in two ways: from appreciation of the land in the event of a future sale, and from annual cash rent payments from farmers.

The company aims for annualized cash distributions in the 3-5% range.

Curious about other alternative investments? Play around with this cool tool to see what else is out there:

18. Buy a Cash-Flowing Business

Since half of all new businesses fail within the first 5 years, perhaps it makes sense to buy one that’s already proven successful.

You can shop on sites like BizBuySell to find opportunities near you. Expect to pay 2-3x the annual earnings as a purchase price, but you can often finance up to 90% of the deal with an SBA loan.

My friend Codie Sanchez joined me on the podcast to discuss the virtues of buying a business vs. investing in real estate, and teaches a course on the topic called Unconventional Acquisitions.

19. Buy a Cash-Flowing Website

As I can attest, blogs and websites can earn great passive income without your direct involvement. But you also usually can’t stand still for long before that income starts to fade.

Things break, content needs updating, and Google rankings are always changing.

Still, if you have web skills, you might like this interview with Stacy Caprio, who bought enough cash flow in the form of existing websites from the Flippa marketplace to quit her job.

20. Flip Raw Land

To be fair, this passive income idea is a ton of work upfront, but done right, you’ll be collecting payments for years.

The basic idea, as explained by Roberto Chavez on The Side Hustle Show, is to buy parcels of vacant land at a discount, and then to re-sell that property on a monthly payment plan.

21. Sell Printables

If you don’t happen to be sitting on mountains of idle cash, the good news is there are still lots of ways you can begin building passive income.

In fact, I believe allocating some of your time to just this pursuit is incredibly valuable. When the assets you build start paying off, you can slowly taper off trading time for money.

One of those is passive income ideas is selling printables through a platform like Etsy. Side Hustle Show guest Rachel Jones reported selling up to $10,000 a month worth of these digital files—think meal planners, intake forms, chore charts, budgeting templates, etc.

printables on etsy

You’re probably familiar with Airbnb and similar sites, where you can turn the extra space in your home into extra cash. Check the calculator on their site to see how much you could earn.

Where this can become more passive is if you have a second property and hire a 3rd party service to manage your bookings, guest communication, and cleaning.

But if you don’t want to deal with guests at all, the Neighbor platform might be worth a look. Neighbor aims to disrupt the traditional self storage industry by letting you house your neighbor’s extra stuff where you have space for it.

earn passive income on neighbor

This is likely to be very passive monthly income after the initial drop off. According to the site, hosts are earning up to $10,000 a year running their own mini self-storage operations.

Your Car

The average vehicle sits idle about 22 hours a day. What if you could turn the time you didn’t need your car into cash flow?

That’s the promise of peer-to-peer car rental platforms like Turo and Getaround. These marketplaces provide a way for to list your vehicle for rent, set your prices, and get paid—and they handle all the insurance.

Some friends of ours in San Diego do this with their personal “fleet”, and have earned enough to offset the cost of their dream car, a Tesla Model S. Of course, they’ve figured out some process efficiencies to protect their investments and minimize their time.

Your RV

The “idle time” stats for RVs are even worse than for cars. If you’ve got a RV parked in your side yard, it might make sense to let another family take it for a spin.

Sites like RVShare facilitate peer-to-peer rentals and cover insurance. The prices range from $150-300 a night!

Your Boat

With sites like Boatsetter and GetMyBoat, you can rent your boat to you landlocked peers. A quick search of boats nearby yielded plenty of results with rates ranging from $230 to $950 per day! 

How often do you really get out on the water?

Your Stuff

A number of marketplaces have popped up to help you make money from items you rarely use, and to help borrowers from buying equipment they don’t really need.

One popular platform is Babyquip, which rents quality used baby gear to traveling families. Members average over $600 a month in rental income.

Meanwhile, FatLlama has gone broader, using the slogan “Airbnb for your stuff.”

24. Subcontract a Service Business

Chris Schwab started a residential house cleaning business back when he was still in college, but he grew it to $60,000 a month in less than two years—all while never mopping a floor or dusting a shelf himself.

What Chris discovered was that, even though there were already dozens of competing cleaning services, there was opportunity in the space. He figured that out while perusing Yelp reviews of existing cleaning companies.

“No one complained about the cleaning itself,” he said. “What people complained about was the customer service. They didn’t know when the crew was going to show up; they couldn’t get a quote; no one was answering the phone. I knew I could do that, and find cleaners to do the actual work.”

Since then, he’s delegated much of the customer support as well. When we caught up, the business took just a few minutes a day for him to manage.

25. Set up a Drop Shipping Store

Drop shipping is a unique type of e-commerce where your supplier actually ships the products to customers on your behalf. As the seller, you don’t have to purchase any inventory upfront, and profit on the spread between the retail price you charge and the wholesale price you’ve agreed upon with your supplier.

In one of the most popular Side Hustle Show episodes of all time, Rene Delgado broke down how he sold $300,000 worth of bounce houses in his first year as a drop ship store owner.

Although there is a lot of upfront work in building the site and securing supplier relationships, drop shipping can be relatively passive after that.

26. Set Up a Vending Machine

Vending machines are one of the oldest passive income ideas—a silent sales force that collects cash and automatically dispenses products when you’re not around.

The challenge is managing inventory and keeping the machines stocked, especially if you have several locations. Still, the thought of returning to a machine and finding it filled with money is pretty motivating.

For more on how the vending machine business can work, check out my interview with Matt Miller, whose passive income empire started with just $36 and a bag of gumballs.

27. License Your Work

Product licensing is a unique way earn residual income from your ideas—while letting someone else do the work. Nate Dallas and his brother split $300,000 in royalties from a Pictionary-inspired card game they licensed to Mattel.

The duo (a dentist and a preacher) didn’t have to design it, produce it, or sell it—but they found someone who could—and they cashed the checks.

Other things you can license:

28. Develop an App or Software

Could you solve a problem with software? It’s the ultimate scalable business in that the same code can be sold to an unlimited number of customers.

While smartphone apps tend to have a short shelf-life, a premium software tool can be sold either as a one-off purchase or a recurring monthly subscription.

As a customer, I’ve bought both. If you don’t have the technical chops to build something like this yourself, you could always partner or hire someone who does. The biggest consideration is to do your homework upfront and make sure there’s a hungry market demand for what you’re building.

Look to tools like AppSumo or ProductHunt to gain initial traction.

29. Develop an Alexa Skill

There are a couple ways side hustlers can make passive income with Amazon’s popular Echo devices.

The first is like Apple’s app store. You can build special Alexa voice apps, called “skills.”

As a skill developer, you can set your own price and earn 70% of the revenue when users buy it. For example, Nick Schwab created a free ambient noise skill, and now has 10,000 paying customers for a premium subscription version, priced between $0.99 and $1.99 a month.

Amazon also has a rewards program to encourage developers to build out the ecosystem of skills. Your rewards are based on the popularity and engagement of your skill, but some developers report earning thousands of dollars a month.

30. Rent Your Bandwidth

A new app called Honeygain has been building a lot “buzz” lately. According to the site, you can earn up to $30 a month when you share “your unused net traffic with data scientists.”

(Figures based on sharing 10 GB a day, which is a crap-ton of data!)

make money with honeygain

After you install the app (available on Windows, MacOS, and Android), connect it to the Internet, and earn rewards passively. On average, it takes users 48 days to reach $20.

Get a $5 bonus to start.

Before you get started though, make sure you’re truly on an unlimited plan as it sounds like this could chew through a lot of bandwidth in hurry!

31. Invest in Small Businesses

To add diversification and cash flow to my portfolio, I’ve taken up a small position in Worthy Bonds.

These small business bonds pay 5% interest, and you can buy them for only $10 apiece. The bonds are used to fund inventory or asset-backed loans to small U.S. businesses.

passive income with worthy bonds

Since the loans use inventory as collateral, they’re considered safer than other personal or business loans. You can also automatically re-invest your interest and make penalty-free withdrawals at any time.

Unfortunately, at press time Worthy is sold out of new bonds but you can sign up to get notified when they have approval to sell more.

Why Passive Income Ideas Matter

I’m certainly no investment guru or financial wizard, but the vast majority of my income is “passive”—or at least time-leveraged.

By time-leveraged, I mean I don’t punch a clock or trade my time for money in any direct way.

I started my career the way most people do—with a job. But over time, I’ve consciously built up more passive income streams, while growing the overall size of the income pie as well.

active vs passive income

The tiny sliver of “active income” on the chart comes from one-on-one consulting calls.

Unfortunately, here’s how the chart looks for most people:

passive income for people with jobs

They have a big chunk of active income—from their job—and (if they’re lucky) a little slice of investment income.

Let’s work toward shifting the balance to the green!

It’s important to note I’ve built these up slowly over time, starting while I was still working a 9-5 job. I don’t want to paint the picture that I’m raking in millions sitting in a hammock on the beach, either—because I’m not.

I still work a few days a week on growing my business. But I get to do it on my own terms and have a ton of fun doing it.

Conclusion: Start Building Passive Income Today

To recap, we’ve covered a couple dozen ways I earn passive income and shared a ton of other ideas for you to get started with today. These income streams didn’t happen overnight for me; they took years of dedicated effort to build.

But that effort is worth it. In fact, it’s required if you ever want to stop trading time for money.

My recommendation is to pick a few of the options on the list that seem most appealing and doable to you, and get started with those. Let me know how it goes!

Too Many Choices?

Start here instead. Punch in your name and email below I’ll show you step-by-step how to add $500 to your bottom line.

Join the Free 5-Day $500 Challenge

You’ll also receive my best side hustle tips and weekly-ish newsletter. Opt-out anytime.

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Frequently Asked Questions

What are the 4 types of passive income?

Passive income comes in 4 main varieties. 1. Investment returns. 2. Residual earnings from assets you build yourself. 3. “Renting” assets you already control. 4. “Reverse” passive income; that is, saving money on recurring expenses.

How do I generate passive income?

The most common way to generate passive income is through investment returns, such as share price appreciation, dividends, or real estate rental income. But perhaps more accessible is to build income-producing assets — like websites — of your own.

What are some examples of passive income?

Stock dividends, real estate rental income, advertising revenue, affiliate commissions, savings account interest, book sales, private lending, and tons more!

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