If you want to start generating passive income, but don't have a lot of money to start, you are in the right place.
This article will cover 9 low-cost ways to earn passive income. All of these ideas cost less than $500 to start and have the potential to make some really attractive returns over the long term. Of course, as with any investment or business undertaking, returns are never guaranteed and your results may vary.
Now I am not going to cover standard advice like putting money into a high yield savings account or buying dividend paying stocks. Sure, they can produce passive income, but the amount can be pitifully small (especially for high yield savings accounts). Plus, you don't really need an article to tell you about these commonly known options.
My ideas are somewhat unconventional and some of them will require a bit of work to get up and running. But I also included strategies that are basically just plug and play. I think you'll find a nice balance between the two in this article.
Here's a preview of the strategies we'll cover. You can jump ahead to any of them using the hyperlinks.
- 1. Rent Out Stuff You Already Have
- 2. Peer to Peer Lending
- 3. Blogging
- 4. Affiliate Marketing
- 5. Real Estate Crowdfunding
- 6. eBooks
- 7. Cash Back Credit Cards
- 8. Online Courses
- 9. YouTube
I use many of these ideas myself, including #1, 2, 3, 4, and 7, so I can confidently say that if done right, you have the potential to generate some great passive income using these strategies.
Let’s get into it!
This post may contain affiliate links. If you click on a link and complete a transaction, I may make a small commission at no extra cost to you.
The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.
1. Rent Out Stuff You Already Have
How Much It Costs to Start: $0
There are a ton of ways to generate passive income from stuff you already own. What I like about this strategy is that you don’t need any money to get started and you can keep it as low-key as you want.
Rent out Your Extra Rooms through Airbnb
This one’s pretty obvious, right? Everyone knows you can rent out extra rooms through Airbnb and collect some cash on the side.
But you should be careful to make sure your activities are permitted by your local municipalities, your HOA (if you have one), your landlord (if you are renting out your place), etc.
Rent Out Your Extra Storage Space
If you’ve got a spare bedroom or closet, or some unused space in your basement or garage, you can rent it out to people looking for extra storage space and generate passive income each month.
Check out Neighbor, who is a leader in this space. I have used them myself – their platform is easy to use and you can get up and running in minutes. I participate in their “refer a friend” program, so if you sign up using this link, you (and I) will get a $50 Amazon gift card when you list your space.
If you want to learn more about this strategy, check out my article on the topic here.
Rent Our Your Cars Through Turo
You can also rent out your car when you aren't using it on Turo. According to Turo, you can make hundreds of dollars a month doing this. Check out their Carculator to get a sense of how much you could make renting out your car through this platform.
If you want to learn more about this passive income strategy check out my article on the topic here.
2. Peer to Peer Lending
How Much It Costs to Start: $25
If you want an easy and simple way to generate passive income, consider peer-to-peer lending.
If you don’t know what peer-to-peer lending is, it’s where you lend money to various borrowers through an online platform.
As of this writing, some of the major platforms in this space include Prosper (which I use) and Funding Circle. Many peer-to-peer lending platforms are not open to individual investors, so be mindful of that when looking around.
The process is simple.
Let’s take Prosper as an example. You go to their website and open up an account (takes about 3 minutes). You then link that account with your bank account and fund your Prosper account. You can invest with as little as $25.
Once your account funds, you can look for loans that meet your criteria and lend out your money. Then you get paid.
Simple and completely passive. I love it.
How Much It Costs To Start: $0 – $150/year
This is one of my favorites.
If you have a knack for writing, you can start a blog. You can write about any topics that you have some expertise in or that interests to you (preferably both!). The topic you write about is often referred to as a “niche.”
One word of caution. If you are writing about health matters (or even politics), Google may classify that as a YMYL topic (which stands for your money or your life).
It may be harder to succeed in YMYL niches because Google wants your site to have “E-A-T” (which stands for Expertise, Authoritativeness and Expertise). Source. In other words, they want advice regarding these areas to come from really reliable sources because incorrect advice can cause serious harm.
Is Blogging Passive?
Not in the beginning. Setting up your website is not passive. Neither is researching the right topics to write about or writing the actual articles. All of that requires work.
But once you are up and running, the payoff can be awesome. This is definitely one of those things where the more you put into it, the more you can get out of it.
If you have a bunch of good articles that are generating traffic, you can start monetizing your blog through two main channels: (i) display ads and (ii) affiliate links (which are customized links to products you are promoting). If you want to expand your monetization options even further, you can create informational courses or ebooks and market them on your blog too.
At that point, the business can be almost completely passive.
This business has no customers, no inventory, no employees, no physical location, and very few operating costs. That’s about as passive as you can get!
If you want to keep growing your blog, you can. Just continue writing articles (or improve existing ones), but even if you don’t, the blog is going to keep rolling even if you take a week off (or even a month off for that matter).
To learn more about how to start a blog (including setting up the website, selecting your niche, getting traffic to your blog, and monetizing that traffic), check out my article on Passive Income Blogging.
If you want to short-circuit the work of starting a blog, one option is to buy an existing blog that is already making money. It can be a fine source of passive income for you with some great potential returns. Some of the main sites that sell blogs are Flippa, Empire Flippers and FE International. You can buy starter sites on Flippa for very little money (like way under $500), but you kind of get what you pay for (and you must beware of scams).
To learn more about this strategy, check out my article on Buying a Blog for Passive Income: What You Need to Know.
4. Affiliate Marketing
How Much It Costs To Start: $0 – $150/year (with website)
Affiliate marketing is another popular way to make passive income. The concept is simple. You are basically a salesperson for a particular product that you want to promote. But instead of knocking on doors or calling people up, you “sell” the product online.
A common method of affiliate marketing is putting affiliate links on your website. As we talked about in the blogging section, this is one of the two primary ways you can make money as a blogger.
When someone comes to a page that has your customized affiliate link and they click on it, you will earn a commission if the person buys the product (or takes some other qualifying action, like signs up, etc.)
How Do You Find Affiliate Programs?
Amazon Associates is one of the most popular affiliate programs out there. They are especially well-suited for beginners because they have easy qualifications, carry almost every product you can imagine, and are a highly trusted source for customers wanting to buy stuff.
Love a particular product and want to write about its benefits? Drop an amazon affiliate link in your article to the product you are recommending and make money every time someone clicks on the link and buys it.
Of course, Amazon isn't the only game in town.
There are many other affiliate programs out there. Just Google any product or company you want to promote and add the words “affiliate program” to the end. You’ll find that many already have an affiliate program in place. All you have to do is apply.
Can I Do Affiliate Marketing If I Don’t Have a Website or Blog?
You can still do affiliate marketing by putting your affiliate links on other places where you have access to traffic. That could be your social media accounts (e.g. Pinterest, Facebook, YouTube, etc.). Or, you could generate traffic through paid ads on social media outlets (although that can get expensive and tricky).
If you want to make this as passive as possible, you should go the route of setting up a website that gets relevant traffic and then let the traffic do its thing.
5. Real Estate Crowdfunding
How Much It Costs to Start: $10-$500
Owning rental properties is one of my favorite ways to make passive income. But buying properties can be expensive. Luckily there are ways to invest in real estate without buying actual properties and managing them.
It's called real estate crowdfunding and it has been gaining in popularity over the past few years.
Real estate crowdfunding is a method used by companies to raise money for real estate investments from a broad range of investors. These companies typically operate online platforms where investors can review real estate investment options.
If the investor finds something that they like, they can choose to invest in it.
The bad news is that, in many cases, these real estate crowdfunding platforms have steep minimum investment requirements. A platform with one of the lowest requirements was DiversyFund. They will allow you to invest with as little as $500. Not a bad way to dip your toe into real estate investing without too much time and effort.
How Much It Costs to Start: $0 (if you do everything yourself)
If you like writing, but blogging is not for you, you can write an eBook and get royalties from selling it online. Amazon KDP (which stands for Kindle Direct Publishing) is a great place to do so. Another option is Apple Books.
Like with blogging, once written, the book can continue to provide you with passive income for years. You can write about any topic, but given your experience and knowledge in social work, government programs, and related areas, you may find success by identifying an underserved topic in that field and filling that gap.
If you don’t like writing but do like the idea of receiving royalties on eBooks, you may want to consider creating “low” or “no” content books and selling them on Amazon KDP. These can be journals (diaries), coloring books, guest books, music composition notebooks, planners, quote books, etc.
7. Cash Back Credit Cards
How Much It Costs to Start: $0
Ok – you won't become a millionaire using this strategy, but it 100% works. Depending on how much you use the credit card, you can generate hundreds (or even thousands) of bucks per year.
The passive income strategy using cashback credit cards is simple:
- Get a cashback credit card that offers a good cashback rate (2% seems to be pretty decent)
- Put as many of your expenses as you can on your cashback card
- Pay off your balances in full each month (can't mess this part up!)
- Collect the cashback rewards for some nice passive income
8. Online Courses
How Much It Costs to Start: $200 – $5,500+ Source
Another passive income idea that you can pursue is developing an online course and getting income from the sale of that course.
Video is the prevailing medium for these types of courses, although audio courses and courses with slides and other written materials also exist. There are a lot of tutorials on how to create online courses. A simple Google search on the topic will give you some great places to start.
Once you have created the course, you can market it through various channels, such as you own website (if you have one), social media, and online course platforms such as Kajabi, Udemy, and Teachable.
How Much It Costs to Start: $0 (if you are completely broke but have a phone to record video). But realistically, expect to spend between $249 and $500. Source
If you prefer making videos instead of writing, you can start a YouTube channel. As with blogging, you will start to earn passive income (through ad revenue) once you get enough traffic coming to your channel.
Once you create the content, the passive income can begin, but getting there can take a lot of work. Creating a quality video is not easy. And like blogging, getting traffic to your channel can be a challenge. You have to create informative (or at least entertaining) content and have compelling titles, and great thumbnails. You also need to understand how YouTube’s search algorithm works.
If you want to learn from the experts and fast track your success, check out incomeschool.com. I purchased a subscription for their course to improve my blog, but they have a terrific course on successfully starting a YouTube channel too.
So there you have it: 9 low cost strategies for generating passive income that you can start for less than $500.
If you have no money and no time, but still want to generate passive income (I am talking really passive, like no upfront work involved, no ongoing work, etc.), check out my article on 15 ways to make truly passive income with no money.
On the flip side, if you can manage to invest more than $500 and are willing to devote some time and effort to a real business that can generate awesome levels of passive income, check out my article on the 12 best passive income business ideas. They include things like vending machine routes, laundromats, bounce house businesses, ATM routes, and much more.