Three Ways to Make Passive Income

What Is Passive Income?

There are plenty of ways to make passive income, but here are three of the best. Everyone wants their money to work for them. Who wouldn’t enjoy seeing their bank account steadily grow with no effort? Most people interested in passive income don’t view than income as their primary source of money. Usually, those with some of passive income view it as a supplement to their primary source of income, typically a job. Some folks, however, are masters of sourcing income that requires very little daily effort. Most millionaires have several forms of income, and you can bet that at least one of them is passive. In this article, we’ll explore three of the best ways to make passive income with one of those being the clear favorite.

 

Real Estate

Real estate is the age-old method of making money with little to no work. Owning property is never a bad idea. In a constantly evolving world, land is one of the few things that won’t ever go out of demand. Although buying property requires an upfront investment and a bit of time to create a cash flow, it has the potential to lead to long-term financial freedom and capital.

 

Purchasing commercial real estate property like hotels, retail complexes, warehouses, office buildings, and more creates income from leases, and the properties appreciate in value over time. Rental income comes from leasing space in commercial buildings to tenants from which you collect monthly rental payments. Those tenants could be either businesses or individual tenants, if you’ve bought an apartment building. Assuming you took a loan to acquire the building, your income should go toward paying that loan off. Ideally, you’d pay that loan off monthly with some income left over as a profit. Eventually, once the loan is paid off, that entire monthly income will become profit.

 

To make your property a true source of passive income, you’ll want to hire a property manager. The property manager is someone who handles the day-to-day responsibilities of the property. That person will service repairs, handle tenant relations, collect rent, and be sure the building is compliant with state and federal laws. Hiring a property manager will cut into your net profits, but it will also save you a lot of time and energy.

 

That rental money is nice and will create a surefire stream of passive income. A major bonus of owning properties, however, is that there is almost always a nice payout at the end of the ride. Whenever you feel it’s time to let go of the property for whatever reason, it’ll almost surely be worth more than it was when you bought it. Remember, land and property is finite. Time almost certainly boosts the value of the property. However, a reliable way to raise the value of your property is to make capital improvement. For example, you could replace the heating and air-conditioning system. You could renovate the interior. You could even build a new building on a piece of land.

 

Real estate is the time-tested method of creating a passive income. It requires a substantial initial investment. Ideally, you won’t have to take out a loan at all. But most people can’t afford to shell out a few hundred thousand or even million dollars on a whim. For most people interested in real estate, a loan will be necessary. Once that loan is paid off, which hopefully doesn’t take an extreme amount of time, your real estate property becomes a money-mill. You’ll typically be responsible for maintenance of the property. But you can hire a property manager to make the property a true source of passive income.

 

Stocks

Another way to make passive income is through the stock market, particularly with dividend stocks. Dividend stocks are companies that pay out regular dividends to investors. These stocks are usually from well-established companies. Those companies also have a long history of distributing their earnings back to investors and shareholders.

 

Companies give those shareholders cash payouts quarterly. These stocks aren’t nearly as risky as most stocks that we’re accustomed to hearing about. With those riskier stocks, the company invests an investors money into growing the company. The payout from those comes when the investor decides to sell his or her share of the company after the company has hopefully grown. With dividends, you’ll get a payout as long as you own a share of that company.

 

Dividend stocks are more popular with an older crowd. Those investors can typically invest more than younger investors and therefore see a higher payout on a quarterly basis. Those older investors also are typically looking for some form of passive income in their retirement. For many retirees, they’re able to completely live off dividends.

 

The biggest appeal for these stocks is their predictability. The stock market is infamous for being unpredictable and having the power to majorly disrupt the national and global economic market.

 

eCommerce

The best way to make passive income, however, is through ecommerce. This method is the easiest and most profitable, by far. Ecommerce is simply selling goods online. This has been around since the internet’s conception. Nobody has capitalized on the internet’s power more than Jeff Bezos, founder of Amazon. Amazon, founded in 1994, the company rakes in hundreds of billions in revenue.

 

So, how can ecommerce become your primary source of passive income? There are two primary methods to go about ecommerce. First, you should decide if you want to sell your own products or other people’s product. Obviously, selling other people’s projects is the easiest and most passive way to earn an income.

 

Drop shipping is the go-to method to sell other people’s products online because it doesn’t require you to acquire or stock products. After all, that’s the most difficult part of selling others’ goods. Fulfillment services erases those burdens. All you do is select and promote the products offered by the fulfillment service you choose. How you promote those products is the trick to a successful drop shipping company. The fulfillment service does the rest.

 

There’s a fair amount of preparation you’ll have to do before you can expect to become a successful ecommerce entrepreneur. First, you’ll need to decide what you want to sell. It’s best to sell something that you’re interested in yourself. Otherwise, you won’t have much to go on when you try to figure out how to market your products to your audience. If you wouldn’t buy a particular product online, then how would you know how to market that product yourself?

 

Aside from your own interest, you also need to take into consideration the size of your potential market. You want to pick a product that has a very niche market, but not so niche that you’ll only have a half dozen customers every month. You also want to avoid oversaturated markets like fitness. There are so many large and small fitness companies in the market that those already established struggle to stay relevant. So, fitness is an example of a market you’d want to avoid, unless you can satisfy two conditions. You have to be incredibly passionate about a particular product and you have to know for a fact that there is an underserved market for that product.

 

Once you settle on a product, there are plenty of automation services available online at your disposal. The big-picture idea with these, for someone looking to make passive income, is to create a network of services that handle the day-to-day operations of your online business. Most automation services offer a variety of services that handle several different aspects and tasks of managing the business. Many of the best automation services handle everything other than creating the Amazon or Walmart business account. That’s right. They’ll do everything from product selection to marketing to order fulfillment.

 

The Best Way to Make Passive Income

You may be asking why we believe that ecommerce is the best way to make passive income. We believe it strikes the perfect balance of investment and payoff. With real estate, it may take many years before you begin to see a true profit emerge from your property. That pure profit will only become substantial once your loan is paid off, or once you’ve made up for the initial investment. With the stock market, it’s a risky game. Yes, dividend stocks are inherently much safer than most in the stock market. But those payouts don’t always amount to much and you aren’t truly in charge of your money.

 

With ecommerce, you decide how you make your money work for you. You can decide exactly how passive you want that income to be.  Once you do some research and settle on a product and figure out how you’ll get your product on potential customers’ screens and then how you’ll get that product to their homes, you’re set. For those looking for a practical way to make a substantial passive income, the world of ecommerce has unlimited potential. There’s plenty more to learn about ecommerce before you make any decisions, so get to reading!