What Is a Passive Income Stream?
Do you need extra cash?
Or is that a silly question?
Perhaps a better question is would you like your extra cash to come from an active or a passive income stream.
Do you understand the difference?
You can easily make extra cash from an active income stream.
If you have a suitable motor vehicle, you can sign up with a rideshare company like Uber or Lyft. Depending on where you live, this can be expensive. You will probably require some or all of a special driver's authorization, a permit for your car, a medical examination, a police check, annual vehicle inspections and increases to your registration, third party insurance and comprehensive insurance costs. In fact, you'll probably need special, much more expensive rideshare insurance.
But once you've got past all that, uploaded photos and installed the Uber and Lyft apps on your smartphone, you're ready to go.
Your income is then entirely dependent on how many hours you can spend driving. That makes it an active income stream.
Do you enjoy walking your dog? Or just walking.
There's an app called Wag. It's a bit like Uber, except instead of finding people nearby looking for a ride, it finds people nearby looking for someone to walk their dog. I imagine you have to go through some checks to get accepted and I have no idea what it pays, but it's another active income stream. Your income is totally related to the number of hours you put into it.
A passive income stream, on the other hand, brings in an income whether you are working in it or not.
This is ideal. It's been said that the average millionaire has 7 passive income streams.
That's not to say that they didn't require a lot of work to set up in the first place. All successful businesses do. But thereafter, they only require a little maintenance work to keep them going.
My #1 Passive Income Stream Recommendation
I suppose I really should say internet marketing in general, because I personally enjoy passive income streams from both affiliate marketing and e-commerce with drop shipping.
Both require websites to be built, but I'll tell you later how you can easily learn how to do this.
With affiliate marketing, you sign up to a supplier's affiliate program and then make a commission on every successful sale that you refer to them.
There are major retailers like Amazon, who will pay you a commission on every Amazon product sold through your affiliate link (and this includes big-ticket items like cameras, coffee makers and home gyms).
There are organizations set up to bring suppliers and affiliate marketers together. These include ClickBank, JVZoo, Warrior+ and Commission Junction, amongst others.
And then there are companies that simply have their own affiliate programs. These can be very lucrative.
But they all have their own rules for approving their affiliates. We cover all this too.
E-commerce can be very rewarding, but is both harder and more expensive to set up.
An e-commerce site sells physical products.
The site looks as if you are a major company stocking all of these products.
But in fact they are drop shipped.
What does this mean?
It means that you have an arrangement with these companies to purchase from them at a wholesale price for a delivery to your customer, who has paid you a retail price.
Clearly, there is a lot of trust involved.
The timing goes like this:
You advertise the product on your website. Someone buys it and leaves you their name and address. You have their money in your account.
You order the product from the supplier using your customer's address for delivery. The supplier delivers the product (this is the drop shipping part).
You have the difference between the two prices in your account and everybody is happy.
Easy? If only it were so. There are so many issues to be got right. I'll cover them all in a future article, but honestly, affiliate marketing is easier and it's where you should start.
Don't get me wrong. An e-commerce site can be very lucrative. But unless you are already very experienced, it will be just a money-sucking black hole. Start here instead and I'll get you into e-commerce later.
My #2 Passive Income Stream Recommendation
Become an Amazon Author
Not as difficult or scary as you might think.
I have four (non-fiction) books published on Amazon and, while J.K. Rowling has nothing to worry about, they do bring in a small, regular and totally passive income.
There are three components to this process:
- Writing your book.
- Publishing your book on the Amazon platform.
- Promoting your book.
Writing Your Book
There are three ways to actually create your book. You can write it yourself, you can buy a book with PLR (Private Label Rights) or you can hire a ghost writer. Each has a different time commitment and a different cost structure.
Writing the book yourself is clearly the cheapest but requires the longest time commitment. The only expense will be getting the cover designed and formatted to the requirements of Amazon's KDP (Kindle Direct Publishing) platform. You can hire someone from Fiverr or Elance to do this cheaply.
By the way, don't be misled by the Kindle in KDP. You can publish your book as both an e-book and a paperback. And it costs nothing to do so. That's right, publishing on Amazon is free. You only pay when someone buys one of your books.
At the other extreme, you can hire a ghost writer. You give the writer the subject matter and an outline of what the book is about and he or she writes it for you. The most expensive alternative and no guarantee of a satisfactory result.
An in-between solution is to find a book, or even a set of articles that can be combined into a book in your chosen subject that come with PLR rights. PLR rights allow you to put your name on the book as the author.
But you can't just do that and publish it. Books and articles with PLR rights are cheap because they have been sold to many other people as well. Amazon would not allow several authors to publish the same book.
So what do you do?
- Change enough of the wording to make it uniquely yours. It helps if you have purchased a number of articles or even more than one book as you can then creatively mix and match. It can be time consuming to get something worthwhile, but far less than writing a totally original book yourself.
- Copy the book into your Word template (see Tip below) so that it looks better and the format is uniquely yours.
- Get a new cover. Either have one designed for you or do it yourself through a site like https://pixelstudiofx.net.
Publishing Your Book
You can find out all about publishing at Amazon by going to https://kdp.amazon.com/en_US/ and signing in with your Amazon account or creating one if you don't have one already.
Tip: KDP provides tools for writing your book, but I've found it much better to use a specific Word template, convert the Word doc to a PDF and then use it to create both the Kindle e-book and the paperback from a single source.
I don't have the space to detail that here, but will fully cover it in a free e-book that I will make available from this site in a future article.
Promoting Your Book
This is a major topic in its own right that I will also cover in my free e-book Become a Best-Selling Amazon Author. Watch out for it in a future article.
My #3 Passive Income Stream Recommendation
Rent Out Your Spare Bedroom
Except for actually finding your tenant, this has nothing to do with computers or the internet.
But if you have a spare bedroom, with a bathroom that can be assigned exclusively to the bedroom's occupant, this can be a brilliant source of passive income.
There are two ways of going about it.
You can look for a long-term single or couple on a flatmates site. You will be able to see what others are charging for something similar and set your pricing accordingly. You need to interview your prospective tenant(s), require references and always say you'll get back to them as you have others who are interested. Don't hesitate to knock someone back if you're not comfortable with them. Always take a bond of 2 to 4 weeks rental.
Get the right person or people and this can be a passive income for zero effort, other than housekeeping that you would normally be doing anyway.
The other way of doing this is through Airbnb, who have now become the largest "hotel chain" in the world.
The downside is more work for you, as you are continually cleaning up (which Airbnb pays for) and welcoming new guests, but the upside is a higher income and the fact that guests are subject to the Airbnb vetting process.
There may be insurance ramifications and you should check with your insurance company.
So there you have it. 3 passive income streams. Personally I have all three, including a young couple in my spare bedroom and bathroom who pull their weight and have become good friends. I've also published books on Amazon.
But my favorite remains affiliate marketing. To find out more about the platform I use and recommend, click on the button below.