We all work hard for our money. Although, truth be told, the money we’re earning doesn’t seem to go as far as it used to. A second income would certainly come in handy, but who has the time to take on a second full time job? After all, you have more than enough on your plate as it is running your own small business.
What we need is a way to generate income with the barest minimum of day to day effort. A money making enterprise that brings in revenue while allowing you to focus all of your time and energy on your own business. In short – what you need is a passive income.
What is Passive Income?
At its most basic a passive income is any money you earn on a regular basis for which you are doing very little actual work in return. There’s an initial investment of time and money up front, but once the enterprise is successfully underway you’re able to enjoy a fairly steady revenue stream with only a minimal amount of labor on your part.
Probably the best example of passive income is rental property. There is the initial investment of purchasing the property, and then of course the money and labor that goes into fixing it up to be rented out. But once that’s done, and you have a tenant installed, you can sit back and collect the passive income generated by your tenant’s monthly rental checks.
Owning rental property may be the most obvious example of passive income, but it’s by no means the only one. There’s quite an array of opportunities for the ambitious entrepreneur looking for a lucrative side hustle in 2019.
Investing In Crowdfunded Real Estate
We all know that investing in real estate can pay serious dividends. Unfortunately, the costs associated with investing in prime real estate are often too high for the average investor. This is particularly true if the bulk of your working capital is already devoted to your own small business.
Still, there are ways to invest in real estate besides single handedly buying and owning your own physical properties. Through crowdfunding you can become a partial investor in the kind of large and lucrative real estate deals that might have formerly been beyond your financial reach.
The crowdfunding real estate industry has seen steady growth over the last few years, and is currently projected to be valued at upwards of $300 billion by 2025. Websites like Fundrise, Alphaflow and EquityMultiple make it easy for investors with limited funds to take part in large scale residential and commercial real estate projects. Initial investments typically range from $500 to $10,000, making them ideal for smaller investors looking to dip their toes in the lucrative real estate market.
Becoming a Peer-to-Peer Lender
Peer-to-Peer (P2P) lending started to gain popularity when Prosper burst on the financial scene in 2005. Marketing itself as an alternative to traditional lending institutions, the web-based company offered borrowers the opportunity to secure small loans from independent lenders at competitive rates. It was a unique lending model that was quick to catch on with borrowers and investors alike, and it wasn’t long before other firms followed Prosper into the P2P lending arena.
Over the years P2P lending has grown into a multibillion dollar industry, and that growth shows no signs of flagging. Peer-to-Peer lending has become an excellent source of passive income for savvy investors looking to put some of their available capital to work.
As a P2P lender you simply fund an account via a Peer-to Peer lending platform and then proceed to make moderate sized loans to a variety of borrowers. Of course, there is always risk when lending money but the return on investment for 2P2 lenders can be substantial. As lender you want to maximize that ROI while minimizing risk, so it is important to maintain a diversified portfolio of borrowers and to be mindful of the amount of money you are investing. But carefully managed Peer-to-Peer lending can provide a lucrative passive income for the smart investor.
Selling Your Photos as Stock Images
Crowdfunding real estate and P2P lending are both excellent sources of passive income. However, they do require a fairly substantial financial investment up front. Fortunately, there are other passive income opportunities that don’t demand as much from your finances, although you will need to invest some of your time and labor.
If you’re one of the millions of Americans who enjoy photography as a hobby you may be able to turn your pictures into something of a passive income. Website designers, bloggers, and e-book publishers are in constant need of stock images to successfully complete their projects. As a photographer you have a valuable commodity on your hands, and you may be able to sell or license your photos for a modest fee.
There are a number of websites (iStockPhoto, Shutterstock, Getty Images, etc) that act as brokerage houses for stock photos. Some of these sites allow anyone to join while others are a bit more selective about the photographers they represent. So it will take some time to find the best venue for your work. But if you are serious about the hobby you may be able to sell your pictures online, turning your love of photography into a tidy little passive income.
Selling Digital Products on Etsy
Etsy is sort of like Ebay for creative people. Etsy’s vendors typically sell handmade products like jewelry, clothing, and works of art. Of course, that doesn’t necessarily fit in too well with our concept of passive income. There’s still a lot of work that goes into creating handmade one-of-a-kind items.
Recently, however, Etsy has expanded their online marketplace to include digital products. These can be anything from photographs that people can download and frame to instructional e-books on a variety of the hottest self-help topics. This is where the passive part of our Etsy income comes in.
Once you create a digital product and upload it to Etsy your work is pretty much finished. When people purchase your product they can download it directly from the Etsy platform. You get paid for each sale and your Etsy inventory of digital products delivers a passive income while you go about your busy schedule. Of course the trick here is to find a digital product that will appeal to large segment of consumers, and that can take some time and a bit of trial and error. But once you hit on an appealing product the buyers will flock to your Etsy profile.
Renting Out Your Home with Airbnb
If you have an untenanted rental home, mother-in-law quarters that are unoccupied, or even just a vacant room in your house you may be able to rent them out via Airbnb or VRBO. Admittedly, this is perhaps the most active of all our passive income suggestions. However, if you set it up properly this can be a good source of revenue throughout the year.
Airbnb and VRBO rentals work best when you have a property that is routinely vacant. That way you can have it ready for immediate rental any time someone wants to book a holiday. You’ll have to nip in and do a little bit of cleaning and maintenance from time to time but for the most part you will be good to go.
Of course, having a separate rental property isn’t always cost effective and, frankly, most of us don’t have a summer cabin going spare throughout the year. But not to worry, there are still some viable options.
If you don’t have another property you can rent out your own home when you’re not there. Many Airbnb and VRBO users do this when major events come to town. They’ll stay at a friends house, or even book a hotel, for the duration while renting out their own home at a substantial markup. Any money spent is easily offset by the income earned and you and your family gets a mini-holiday in the bargain.
Many Americans are looking for passive income opportunities to help increase their overall earning potential. For small business owners it’s a smart way to put some of their sleeping capital to work. For first time entrepreneurs its an easy way to try your hand at owning and operating your own business.
Passive income opportunities come in many different shapes and sizes. Some require more effort than others. Some also demand a greater financial investment. But all passive income strategies have one thing in common – the ambition of the entrepreneur. If you have the creative instinct, and are business minded, finding the right passive income strategy can help you increase your personal wealth while laying the groundwork for future financial independence.
Sprout Funding helps small businesses secure the money needed to stabilize and grow. Keep your funding simple, and straightforward. 866-962-4922
We are available to talk with you weekdays, from 9-5 CST
The Sprout Funding blog offers tips, reports, insights and other ideas to help small business owners learn and grow. Have a question for our team? Email us at: firstname.lastname@example.org, and tell us how we can help you.
If you are ready for the money to grow your business, let's get started!