Let’s be honest, passive income is “so 2015.” People have been throwing this word around for the last few years, and the truth is that a lot of the strategies that used to work well aren’t working as well today. I consider myself to be somewhat of an expert in this field of earning passive income online. I have been solely relying on my online income for close to 3 years now, and I have consistently grown this income year after year. Am I saying this to brag? Absolutely not! The internet is a place where anyone can share information, so I am simply sharing this as a credibility piece so you know you are in the right place. Here are the passive income strategies I am personally following that are working for 2020.
5 Passive Income Strategies For 2020
1. Blogging
The first strategy for earning passive income is blogging. Now, I know what you are probably thinking… isn’t blogging dead? Yes, it is. But, only a certain type of blogging that is dead. Gone are the days of blogging about what you had for dinner or your opinion on the latest episode of a TV show. I respectfully want to inform you that nobody is interested in that. If you enjoy doing this type of blogging as a hobby, thats perfectly fine! However, this type of blogging won’t be putting money in your bank account.
The type of blogging that will make you money is authoritative, niche specific blogging. What I mean by this is creating a resource of highly valuable information around a certain topic. I ended up launching my blog Investing Simple a little over a year ago, and my business partner and I provide valuable knowledge on the topic of personal finance and investing. Specifically, we help people in deciding what investing platforms and brokerages are best for them based on their needs. We leverage affiliate marketing in order to make money. Essentially, we earn a commission whenever we refer a new customer to one of these investing apps.
So, let’s cut to the chase here, how much dough can you make? Well, to tell you the truth, blogging is one of the slowest methods of making passive income. After one year of blogging, we have written about 100 articles. Our monthly revenue ranges from $2,000 to $4,500 per month. However, this income is totally passive! We could stop what we are doing tomorrow and likely continue earning a few thousand a month for years to come.
2. YouTube Videos
This was my original method for earning passive income, and it still works great! I have been creating YouTube videos related to money, personal finance, investing and making money online for almost 3 years now. While it started off slow, this channel has now snowballed into close to 500,000 subscribers. In terms of earnings, just from ad revenue alone I am usually averaging $10,000 to $25,000 a month based on how many views I get.
Again, I just want to restate, this did not happen overnight! In the first 3 months of making YouTube videos (spending 10 to 15 hours a week!) I made about $60. If you do the math on that, I was effectively working for about $0.40 per hour. However, creating content like this is a lot like compound interest. It starts off slow at first, but builds into something massive.
Think about it this way. Every piece of content you produce has the potential to be viewed each day. Each time someone watches or clicks on an ad, you get paid. The more content you produce, the more your content is viewed. By the time you have 100 videos or so, there are usually thousands of eyeballs on your content each and every day!
3. Stock Market Investing
Before I was a blogger or a YouTuber, I was (and still am) a stock market investor. I actually started my channel as a way to share my investing education with others and to share my experience investing in the stock market. I still think this is one of the best ways to earn passive income, however there is one big problem with this strategy… The problem is, it takes money to make money.
Got $5,000,000 lying around? Great! You can toss that into a high yield dividend fund and earn about $150,000 a year passively from dividends. You will never have to work a day in your life, and you won’t be touching the principal.
…I don’t know about you, but I certainly don’t have that kind of money lying around. The strategy that I follow instead goes something like this. I take the passive income that I earn from my online businesses and funnel some of that into my brokerage account. I spread that money across a few stocks I like as well as passive index funds.
This is honestly one of my favorite strategies out there. You invest your time into one of the other methods of earning passive income, like blogging or YouTube videos! Then, you live below your means and invest the surplus into the stock market or other assets. That is how you truly create wealth for yourself. I would call it “passive income-ception.”
4. Crowdfunded Real Estate
This is a newer investment for me, but it is honestly one of my favorites. Crowdfunded real estate is a totally passive, hands off approach to investing in private real estate deals. Here’s how it works. Investors from all over collectively pool their money together. Then, that money is used to purchase cash flow producing real estate. The profits from the asset appreciation or cash flow are passed along to the investors in the form of dividend payments.
With most platforms, there are two types of investments being made. Equity investments make you an owner of the property, similar to a shareholder in the stock market. If the property appreciates in value, when it is sold you are entitled to a portion of those earnings. Woo hoo!
The other type of investment is debt investments. This is when you are simply acting as the bank and financing a construction or rehab project for a developer. Returns from this type of investment are made from interest payments.
Is one better than the other? Nope! Most real estate experts recommend a blend of both debt and equity investments in your real estate portfolio. These crowdfunded platforms give you all of the benefits of private real estate ownership without the hassle of actively managing properties or dealing with tenants. Most of the platforms are portfolio based and 100% passive. You simply choose a portfolio based on your investment objectives (like growth or income), deposit some funds and forget about it!
5. Owner Occupied Real Estate Investing
Wait, before you say it… “owning real estate isn’t passive income!” Hear me out. One of the biggest investments I made in 2019 was purchasing my first physical real estate investment. I took advantage of the FHA financing and purchased a 3 family property. The idea behind this strategy is that by renting out the other two units, you are able to offset your mortgage and significantly lower your housing costs.
In my case, the unit I live in is the main house which is around 2,000 sqft. If I were to buy a single family home of that size, my mortgage would be around $2,200 a month. Now this property was significantly more expensive, and my mortgage is closer to $3,200 a month. However, after factoring in the rental offset from the other two units, I am only paying about $1,400 per month. I am also building equity in a much more valuable property, while taking advantage of all the tax benefits of real estate investing.
So, back to the elephant in the room, how is this passive income? Regardless of whether or not you go the single family or multi family route, you will still have a lawn to mow and a driveway to shovel. You will still have a roof to replace every 30 or so years. The only difference is you have multiple units under this roof. Oh yeah, and the other big difference, you will be getting two checks a month from your tenants! Technically speaking, this isn’t 100% passive income, but most would agree that the owner occupied real estate investing strategy is not much more work than single family home ownership.
Closing Thoughts
Are these the only methods out there for earning passive income? Absolutely not! These are simply the methods that I am applying day in and day out. If I could leave you with one takeaway from this, it would be the “passive income-ception” we discussed earlier. True generational wealth is made from taking your surplus income and putting into assets (like stocks, bonds and real estate) that have the potential to continue producing income for years to come. Making money in any of these ways won’t happen overnight, but the best time to get started is today.
