Passive income is known as one of the most desirable things entrepreneurs seek when they try to achieve another source of income that will not interfere with their routine.
One of the main problems with this is the difficulty it represents for people to achieve. The main challenges that people face when attempting to generate passive income are:
- It requires dedication
- It’s not a short term goal
- The ones that don’t require capital will require technical knowledge
How Does It Work?
When a revenue source is passive, it means that it requires little to no maintenance (in time and/or investment) to keep the revenue flowing. This doesn’t mean that you can forget about it once you’ve achieved the goal. On the contrary, it’s important that you follow-up, regardless of how automated it may be.
Ideas To Generate Passive Income In 2020
1. Affiliate Marketing
Affiliate Marketing works as follows: the Affiliate promotes the product of an entrepreneur or company in exchange for a commission for each sale or action taken. This is usually done by developing a niche website that is a site that focuses on a very specific theme, and by doing so, has managed to position itself within the first search options on Google, therefore generating good traffic. This type of sites can generate passive income by:
- Subscribing as an affiliate in highly popular platforms such as Rakuten, ShareASale, and Awin.
- Some companies have platforms of their own such as Amazon Affiliates.
- It’s compatible with having a full-time job
- There are useful skills that can be learned such as creating and managing the website
- There’s no need to create a personal brand
- Your income will depend on how good you position the website on Google searches
- It’s a difficult business model to scale
- There’s a lot of competition in the market
2. Selling Online Courses
With a market that’s expected to reach a valuation of $325 Billion By 2025, this industry is growing at a rapid pace. To create an online course, you will need a basic investment to acquire a good quality camera and some experience with video edition to create high-quality video content. Afterward, you can upload the course to platforms such as Udemy and Teachable, where you can begin selling it to other people.
- It has great potential, and if well implemented, there’s a lot of profit to be made
- It could be very satisfying on a personal level
- It’s the most complicated business model of all
- It requires to be knowledgeable on a specific topic and to have a teaching calling
- Some platform can take up 50% of your profits
3. Rent An Empty Space
Renting a space can mean anything from renting a sofa for a night to renting a luxury apartment. This form of passive income is great if you have a property or an unused space that and would like to rent it out to make a profit out of it. One important aspect to keep in mind is that the space you wish to rent should be located in a tourist area.
- There are specialized platforms that can help you manage your daily rentals, such as Airbnb, Couchsurfing, and HomeAway
- Some companies manage the property for approximately 25% of the income
- Very scalable
- It’s much more profitable than annual rentals
- You need to have a property or be able to invest in one
- Depending on the country, there are specific regulations that may apply
- It can be very expensive to operate
- High insurance fees must be paid because of the type of business and the risks involved
4. Invest in Crowdfunded Real Estate
This is a new type of crowdfunding where you invest in real estate with a minimum investment. It is like investing in shares of a company but instead, money goes into a property. Some platforms handle this type of crowdfunding such as Fundrise and RealtyShares.
- You get the advantage of a REIT (real estate investment trust) with more flexibility and potentially high returns of up to 12.25% of your investment
- With just $500 you can start investing
- Some platforms allow you to choose what properties you want to invest
- Since they are private funds and not public stocks, you won’t be able to liquidate your investment easily and access your cash right away
- Your investment could be tied up from anywhere between six months to five years
- Payment of revenue can vary monthly or quarterly, depending on the website and investment opportunity
5. Peer to Peer Lending
This is a form of direct lending of money to individuals or businesses without an official financial institution participating as an intermediary in the deal. P2P lending is generally done through online platforms that match lenders with potential borrowers, such as Lending Club.
- You can start with only $1 to open the investment account
- You can create an investment portfolio by choosing the loans you want to give out
- Interest payments are made monthly while the debtor repays the loan
- Higher returns to the investors
- This investment is exposed to high risks
- No insurance/government protection
- Some countries do not allow peer-to-peer lending
If Time Is Money Then Passive Income Is The Equivalent Of Time
Passive income provides you with something more valuable than money. Time is perhaps one of the most valuable things in life. Through passive income, you can make additional money and even achieve financial independence, a better quality of life and more free time to spend on whatever you choose to.