Passive income is a great way to generate additional income without having to put in long hours at work. With the right strategies and smart investments, you can have the best passive income side hustles that provide consistent cash flow for years.
But with so many different ideas out there, it can be hard to know where to start. That’s why we’ve created this list of 20 of the best passive income side hustles available today.
From investing in real estate or stocks and bonds, to starting an online business or creating digital products to generate income – there are plenty of options out there for anyone looking to increase their monthly income stream. So if you’re ready to get started on your journey towards financial freedom, take a look at our list below.
Table of Contents
Real Estate Rentals
Remember, while this can be a great source of passive income, it’s not without its challenges and it requires quite a bit of upfront work and investment.
Step 1: Financial Planning
Before you do anything else, you need to get your finances in order. Investing in real estate (whether residential or commercial real estate) requires a considerable amount of capital. Think about how much extra money that you can afford to invest, taking into account your savings, income, and existing expenses. It’s also important to have a clear understanding of your credit score, as this will impact your ability to get a mortgage.
Step 2: Educate Yourself
Learn as much as you can about real estate investing in rental properties. Read books, follow reputable real estate blogs, listen to podcasts, take online courses, and even consider attending local seminars or workshops. You’ll need to understand the market, learn about different types of properties and neighborhoods, understand the laws and regulations, and much more.
Step 3: Choose Your Investment Property Type
What kind of property do you want to invest in? Single-family homes, multi-family properties, townhouses, condos, or maybe even commercial properties? Each comes with its own set of pros and cons, so weigh these carefully.
Step 4: Scout for Locations
Location, location, location. The adage holds true in real estate investing. Look for areas with high rental demand. This could be near universities, business centers, hospitals, or tourist attractions. Make sure to also consider the property taxes, crime rate, and future development plans in the area.
Step 5: Crunch the Numbers
Calculate your potential return on investment. Include all the potential expenses like mortgage payment, insurance, property taxes, maintenance costs, and property management if you plan to use it. Then, consider the potential rental income you can make. Does the math add up for making money with positive cash flow?
Step 6: Secure Financing
Unless you’ve got a hefty sum saved up, you’ll likely need to secure a mortgage for generating income from real estate. Meet with a mortgage broker or lender to discuss your options. Remember, the mortgage terms can significantly affect your profitability.
Step 7: Make the Purchase
Found a property you love and the numbers work out? It’s time to make an offer. Negotiating the price might seem daunting, but remember, as an investor, you’re looking for a deal that makes financial sense and gives you extra cash. Be ready to walk away if the numbers don’t add up.
Step 8: Prep Your Property
Before you can rent out your property, you’ll need to make sure it’s rent-ready. This might involve some minor repairs or upgrades. A clean and well-maintained property can attract better tenants and potentially allow you to charge higher rent.
Step 9: Find Tenants
Advertise your rental property on various platforms. Conduct thorough background checks on potential tenants – you want to make sure they’ll be reliable and respectful of your property.
Step 10: Hire a Property Manager (optional)
If you’d rather make passive income and not deal with the day-to-day tasks of managing a rental property, consider hiring a property manager. They can handle everything from finding tenants, collecting rent, dealing with maintenance issues, and more.
And there you have it! Remember, real estate investment is a marathon, not a sprint. It requires patience, but if real estate investments are done right, it can provide a steady passive cash flow and of passive income for years to come.
You can also make money from vacant land if you’d rather go that route.
Invest in Dividend Stocks
Another great way to generate passive income is investing in dividend stocks. These stocks are companies that pay a portion of their profits as a dividend to its shareholders. These dividends can range from 2% to 8%, depending on the company and industry, with some paying up to 10%. Investing in these stocks requires an upfront investment of capital but can yield a high return on investment over the long-term. Just make sure to do your due diligence and pick stocks with a lower risk of dividend cuts or suspensions.
Step 1: Understand What Dividends Are
First, it’s essential to understand what a dividend is. Simply put, it’s a portion of a company’s profits that is paid out to shareholders, typically on a quarterly basis. Not all companies pay dividends – many prefer to reinvest all their profits back into the company for growth.
Step 2: Know Your Financial Situation
Before you start investing, you need to know your financial situation. This involves understanding your income, expenses, debts, and how much money you have available to invest. Also, consider your financial goals and how dividend investing fits into those.
Step 3: Decide on Your Risk Tolerance
Understanding your risk tolerance is crucial when it comes to investing. Can you stomach the ups and downs of the stock market, or are you more conservative? Remember, while dividends can provide a steady income stream, the stock price can fluctuate, and there’s always the risk of losing money.
Step 4: Learn About Different Dividend Stocks
There are many different types of dividend stocks out there, including those from established, blue-chip companies, and those from smaller, high-growth companies. Each comes with its own set of risks and rewards. Spend some time researching and learning about different industries, companies, and their dividend history.
Step 5: Open an Investment Account
To invest in dividend stocks, you’ll need to open an investment account, if you don’t have one already. This could be a standard brokerage account, or a tax-advantaged retirement account like an IRA or a 401(k). Each type of account has its own benefits and drawbacks, so make sure to do your homework.
Step 6: Start Picking Stocks
Now comes the fun part – picking your dividend paying stocks well. But don’t just go for the stocks with the highest dividend yield. Look at the company’s financial health, its dividend history, its payout ratio, and its potential for future growth. Remember, a high dividend yield won’t help you if the company goes under.
Step 7: Diversify Your Portfolio
As with all forms of investing, it’s important to diversify your portfolio. Don’t put all your eggs in one basket – spread your investment across different sectors and industries. This can help mitigate risk and provide more stable returns.
Step 8: Set up a Dividend Reinvestment Plan (DRIP)
A DRIP automatically reinvests your dividends back into the stock, helping you buy more shares. Over time, this can result in significant growth due to the power of compounding. Most brokerage firms offer this service, often at no extra cost.
Step 9: Monitor Your Investments
Finally, don’t forget to regularly review and monitor your investments. The market changes, companies change, and your financial goals may change. Regularly reviewing your portfolio ensures it still aligns with your financial goals and risk tolerance.
Here’s more information on how to make money from stocks.
Peer-to-peer (P2P) lending has become an increasingly popular passive income side hustle in recent years. P2P platforms match investors with borrowers, and the investor can earn a fixed return on their money without ever leaving home. Returns vary depending on the platform, but returns of 6% to 10% are not unusual. Here’s how to get started.
Step 1: Understand the Risks and Rewards
Before you dive in, it’s important to understand that while P2P lending can be profitable, it also carries risks. You’re lending money to individuals, many of whom might not qualify for traditional bank loans. This means there’s a risk they might default on their loan. To mitigate this, most P2P platforms spread your investment across multiple loans. This way, even if one borrower defaults, your entire investment isn’t wiped out.
Step 2: Choose a P2P Lending Platform
There are numerous P2P lending platforms out there. Some popular ones include LendingClub, Prosper, and Funding Circle. Each platform has its own set of criteria for lenders and borrowers, as well as different interest rates and fees. Be sure to read reviews and understand their terms before making a decision.
Step 3: Set Up Your Account
Once you’ve chosen your platform, you’ll need to create an account. Most platforms will require some personal information and a bank account from which you’ll fund your loans.
Step 4: Decide How Much to Invest
Like any investment, don’t put in more money than you can afford to lose. A good rule of thumb is to only invest a small portion of your overall portfolio in P2P lending.
Step 5: Choose Your Investments
Here’s where the fun begins! On most P2P platforms, you can browse through potential loans and choose which ones to invest in. Each loan will have a risk rating, the borrower’s credit score, and other information to help you make your decision.
Step 6: Monitor Your Investments
Once you’ve made your investments, it’s important to monitor them regularly. Keep an eye on repayments, and if you’re feeling adventurous, consider reinvesting any returns you make into new loans.
Rent Out Storage Space
If you have extra space in your basement, attic, or garage, consider renting it out as storage space. This is a great way to make some passive income with minimal effort. You can charge a monthly fee for people to store their belongings in your space. Here’s how to get started.
Step 1: Evaluate Your Space
First things first, you need to assess your space. How big is it? What kind of items could it potentially store? Could it accommodate large items like furniture, or is it better suited for smaller items like boxes or personal belongings?
Step 2: Clean and Prepare Your Space
Ensure that your space is clean, well-lit, and secure. Remove any personal items, and consider adding shelving or racks to maximize the space available.
Step 3: Determine a Fair Price
Look around to see what storage facilities in your area are charging. Your price should be competitive, but remember to factor in the convenience and features of your space.
Step 4: List Your Space
There are several online platforms like Neighbor or StoreAtMyHouse where you can list your storage space. Take clear photos, write a detailed description, and be sure to highlight any security features.
Step 5: Screen Potential Renters
Just like renting out a room or a home, it’s essential to screen potential renters. Make sure they have a legitimate need and aren’t planning to store anything dangerous or illegal.
Step 6: Create a Contract
Even though you’re not a professional storage facility, you should still have a formal agreement in place. This should outline the terms of the rental, including the price, payment terms, what can and can’t be stored, and the process for ending the agreement. It’s a good idea to consult with a lawyer when creating this contract.
Step 7: Arrange for Move-In
Coordinate a time for the renter to move their items in. Make sure to respect each other’s privacy and establish boundaries for when and how they can access their belongings.
Step 8: Keep Communication Open
Maintain open communication with your renter. If there are any issues with the space or they are not following the agreement, be sure to address these problems immediately.
Build a Mobile App
Got a great idea for a mobile app? You’re not alone. With billions of smartphone users worldwide, mobile apps have become one of the primary ways people interact with the digital world. But how do you go from idea to app? Here’s a step-by-step guide to getting it done.
Step 1: Refine Your Idea
Start by refining your idea. What problem does your app solve? Who is it for? How is it better or different from existing solutions? Writing down your answers can help clarify your concept and give you a starting point for development.
Step 2: Market Research
Next, conduct market research to understand your potential users and competition. This can help you refine your idea further, identify potential challenges, and find ways to differentiate your app.
Step 3: Sketch Your App
Now it’s time to visualize your app. Sketch out the user interface on paper or use a wireframing tool. This will help you understand the user flow and decide on the key features for your app.
Step 4: Create a Mockup
Take your sketches and create a more detailed mockup. This isn’t the final design, but it should give you and any potential developers a clearer idea of what you’re aiming for.
Step 5: Build Your App’s Backend
Your app will need servers, databases, and APIs to function. Now’s the time to set up the backend or choose a BaaS (backend as a service) provider.
Step 6: Test Your Prototype
Now that you’ve got a working prototype, it’s time to test. Gather some users and collect feedback. You want to identify and fix as many problems as you can before launch.
Step 7: Build the App
If you’re not a developer, this is the point where you’ll need to hire one. Give them your mockups, user feedback, and goals for the app, and they’ll turn your idea into a working app.
Step 8: Test Again
Once your app is built, test it again. This is your chance to catch any bugs, crashes, or usability issues.
Step 9: Launch
You’ve tested, retested, and now you’re ready to launch. Submit your app to the App Store or Google Play, and promote it to your target audience.
Step 10: Gather Feedback and Improve
After your app is live, gather user feedback and make updates and improvements. Remember, launching your app is just the beginning. To keep users engaged and attract new ones, you’ll need to continually improve and update your app.
Rent Out Your Car
One of the best passive income sources for side hustles is renting out your car. It’s relatively easy to do, and depending on how you manage it, can be quite lucrative, and pretty easy to implement.
Step 1: Understand the Pros and Cons
The first step is understanding the benefits and drawbacks of renting out your car. On the one hand, you can make a decent amount of passive income. On the other, there’s increased wear and tear on your vehicle and potential risk of damage or accidents. Make sure you’re comfortable with these aspects before you proceed.
Step 2: Research Car Rental Platforms
Next, research the different platforms available for peer-to-peer car rentals, such as Turo or Getaround. Each platform has its own policies, insurance coverage, and fees, so make sure you understand how they work.
Step 3: Ensure Your Car is Rental-Ready
Before you can rent out your car, it needs to be in excellent condition. Ensure your car is clean, well-maintained, and free from any mechanical issues. Safety is paramount, so consider having your car inspected by a professional.
Step 4: Set Your Price
Now it’s time to decide how much to charge. Check what similar cars are renting for in your area and consider factors like mileage, condition, age, and the make and model of your car.
Step 5: Create Your Listing
Create a thorough and honest listing for your car. Be sure to include high-quality photos and highlight any special features or rules (like no smoking, for example). Be responsive to potential renters and provide excellent customer service.
Step 6: Manage Your Rentals
Once your listing is live, you’ll need to manage your rentals. This includes coordinating pick-ups and drop-offs, cleaning the car between rentals, and handling any issues that arise. Some car rental platforms offer remote key handoff solutions, so you may not need to be physically present for every rental.
Step 7: Regular Maintenance and Review
Keep up with regular maintenance to ensure your car stays in good condition. Regularly review your listing and prices to stay competitive. And don’t forget to ask your renters to leave a review – positive reviews can lead to more rentals in the future.
Here are other ways to make money from your car.
Create a Vending Machine Business To Generate Passive Income
Creating a vending machine business is another great passive income side hustle. With vending machines, you typically provide the location, stock it with products, and collect the revenue. Let’s take a look at how to get started.
Step 1: Research and Plan
Your first step is to conduct market research. Understand what kind of vending machines are successful in your area – snack, beverage, specialty items, etc. Determine the demographics and ideal locations for your vending machines, such as office buildings, schools, or shopping centers.
Step 2: Calculate Your Budget
Next, you’ll need to calculate your budget. Costs to consider include the vending machines themselves, inventory to stock the machines, transportation, insurance, and potential licensing fees.
Step 3: Choose the Right Vending Machines
Once you’ve set a budget, it’s time to purchase your vending machines. The type of machine you’ll need will depend on what you plan to sell and where your machine will be located. Remember, machines with more advanced features like credit card readers may cost more upfront but could increase sales in the long run.
Step 4: Source Your Products
Next, source the products you plan to sell. Choose reliable suppliers and buy in bulk to save costs. Make sure your product choices align with your target audience’s preferences.
Step 5: Secure Prime Locations
The success of your vending machine business largely depends on their locations. Look for high traffic areas where your target demographic spends time. You’ll need to negotiate with property owners or management companies to place your machines.
Step 6: Service Your Machines
Once your machines are up and running, they’ll need to be serviced regularly. This includes restocking products, collecting money, and handling any necessary repairs or maintenance. Good service is crucial to keep your machines functioning and your customers happy.
Step 7: Monitor and Adjust
Lastly, monitor your machines’ performance and adjust as necessary. This might mean changing product offerings, adjusting prices, or even moving a machine to a better location. Remember, the key to a successful vending machine business is flexibility and responsiveness to customer preferences.
Here’s more on how to create a successful vending machine business.
Create a Youtube Channel to Earn Passive Income
If you’re looking for an increasingly popular side hustle, consider creating a Youtube channel. A successful Youtube channel can generate consistent passive income through ad revenue and product promotions. Here’s how to do it.
Step 1: Identify Your Niche and Target Audience
The first step in creating a YouTube channel is identifying what you’re passionate about or knowledgeable in, and who might be interested in this content. This can be anything from cooking to video games, travel vlogs, makeup tutorials, educational content, or fitness advice. Your channel should focus on a specific niche that you have expertise in and a passion for.
Step 2: Create Your YouTube Channel
Head to YouTube’s website, click on “Create a new channel” and follow the steps. You’ll need a Google account to set up your YouTube channel. Choose a unique, memorable name for your channel that’s related to your niche. Consider something that’s catchy and easy to remember.
Step 3: Plan Your Content
After deciding your niche, it’s time to plan the content you’re going to create. Your videos should be interesting, engaging, and offer value to the viewer. Try to bring something new or unique to your videos that distinguishes you from others in your niche. Consider creating a content calendar to plan your videos in advance.
Step 4: Produce High-Quality Videos
You don’t need high-end equipment to start a YouTube channel, but investing in a decent camera and microphone can drastically improve the quality of your videos. Pay attention to good lighting and clear sound. You should also learn basic video editing skills to make your videos more professional and engaging. There are plenty of free and paid video editing tools available for this.
Step 5: Optimize Your Videos for SEO
Optimizing your videos for SEO can significantly improve their visibility on YouTube. Make sure to include relevant keywords in your video title, description, and tags. Create engaging thumbnails and write compelling titles and descriptions to get more clicks.
Step 6: Promote Your Channel
Share your videos on your personal social media platforms and any relevant online communities or forums. Encourage viewers to like, comment, share your videos, and subscribe to your channel. You can also collaborate with other YouTubers in your niche to reach a larger audience.
Step 7: Monetize Your Channel
Once your channel meets the YouTube Partner Program requirements, you can apply for monetization. This allows you to earn revenue from ads on your videos. Other methods of earning income can include sponsorships, merchandise sales, or fan funding through platforms like Patreon.
Here’s more on how to create a successful anonymous YouTube channel.
FAQ – Best Passive Income Side Hustles
Do high-yield savings accounts count as passive income streams?
Yes, high-yield savings accounts count as passive income. When you deposit money into a savings account, the interest earned is considered passive income. However, this usually a low-yield form of income and it may take a long time to accumulate significant earnings.
What does the Internal Revenue Service think of passive income?
The Internal Revenue Service (IRS) views passive income as any earnings generated from activities that require minimal daily effort or involvement. For example, rental income, dividends from stocks and shares, or income generated from investments. The IRS taxes passive income the same as regular earned income but may offer special deductions for certain types of passive income.
How many regular passive income streams can one person have?
There is no limit to the number of income streams a person can have. It is important to diversify your sources of income so you don’t have all your eggs in one basket. The key is to find multiple sources that provide good returns with minimal effort and time investment. Investing in real estate, stocks and shares, and starting a YouTube channel are just some of the ways you can create passive income streams.