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At Buildapreneur, we are all about building passive income because who cares if we get rich if we don't have freedom, right? When your income is passive, you can travel the world, do the things you love doing, and spend time with your loved ones, all while earning an income. This article contains Spencer's best passive income ideas to date! He's had great success with all of them, and you can too!
Types of Passive Income
The thing you have to understand about each of these passive income ideas is that they require sacrifice. You've got to sacrifice one of the following things to gain passive income:
- Time – Most passive income systems (i.e. the machines that generate your passive income) require an investment of time up front.
- Money – Others require an investment of money to get the passive income machine up and running. If you don’t have money to put into this, that’s okay – you can just do the ones that require you to put in time.
It's important to realize that this is just how passive income works. Anyone that is telling you that passive income doesn’t take time or money or that you can have a passive income in 30 days, they’re straight lying to you.
But, think about it – even if it takes a year to get a solid passive income stream up and running, who cares! A year to create passive income for the rest of your life (or at least a few years) is so worth it.
Creating Passive Income With No Money
So, let's dig in to the good stuff! You're probably wondering how to create passive income with no money, and these first passive income strategies will do just that. Let's get started with Spencer's favorite passive income ideas…
Recurring Affiliate Programs
Some passive income strategies will bring in some money and others will bring in a lot. This first strategy is how Spencer makes the majority of his income. It's doing affiliate marketing in a specific way: with recurring affiliate programs.
What is Affiliate Marketing?
Let's back up for any of you who aren't already familiar with affiliate marketing. Most companies will incentivize people for referring people to their products – they’ll pay you a portion of what people give them. That's called being an affiliate.
For example, when someone clicks a your affiliate link to Amazon and they buy a product, Amazon will give you 6% of the purchase price. Now, obviously, you aren’t going to make a lot of money with Amazon.
Recurring Affiliate Programs
There are certain companies that pay much higher commissions and that collect money from their customers every month.
For instance, pretty much every software company requires a monthly fee to use their software. So, if you refer a customer to a piece of software that does that, you'll get paid every single month that the customer sticks with that software.
One of Spencer's favorite softwares is ClickFunnels and it costs about $100/month. If he refers someone to ClickFunnels, they sign up through his special link, and then as long as that customer stays a customer of ClickFunnels and continues to pay them $100/month, ClickFunnels will pay Spencer $40/month.
Here's What Really Rocks
The cool thing about this passive income idea is that you don't have to do any work except for the initial work of getting customers in the door. You don't have to do any of the customer service or any of that really hard and frankly annoying stuff that really kills passive income. You can just continue to collect commissions every single month without doing anything more.
This is how Spencer makes the vast majority of his passive income and he's been adding in other methods, but this is honestly how he does most of it because it is very, very passive.
This technique can last for years. It usually can’t last for your whole lifetime, but 3 or 4 years of passive income can easily be generated this way, and all you have to do is get customers in the door.
Arbitrage: It Can Be Pretty Passive
Out of all the passive income strategies, this is the one that actually got Spencer started with passive income, and it's one of the first ways he made money on the internet.
Here's how it works: If you were to go onto Craigslist and buy a car for $1000 and then turn around and sell it to your neighbor for $2000, that arbitrage. And honestly, this is how all companies work.
Reselling Digital Services
So the first way Spencer made money online was doing this exact same thing with online marketing. He found people who do a good job and offer services, such as web design, email marketing, funnel design, graphic design, etc. for $5-$30 an hour and then he offered it at a higher price.
Some the best places to find people who offer these types of services includes:
It's not very hard to find good people to do this type of work. A lot of the people on these sites don’t want to get clients because they don’t want to deal with everything that goes along with that. They just want to work, and if you can give them steady work, they’re stoked about that.
It's pretty simple; you can build up an audience on Facebook, talk about how you offer graphic design services (or whatever services you decide to offer), and then you offer those services and hire people to do the work.
YouTube – Passive Income Machine
Out of all the passive income ideas we are presenting here, as well as all of the passive income strategies that are possible in the world, this one is Spencer’s all-time favorite. He loves it because of the way it works and because you can make it really fun. For example, the video at the beginning of this article was filmed while he was lounging in a hammock in the woods.
YouTube is a search engine and what makes it such an awesome search engine is that if YouTube decides to recommend your video in the search results, it is very likely that they will continue to rank it for 5, 6, or even 7 years.
That means that if you can get a video to rank today (which obviously takes work), then the next year and the next year and the next year, you can be making money off of that same video.
How to Succeed on YouTube
Discover how the YouTube algorithm works, so that you can monetize your videos for passive income success!
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YouTube = Digital Real Estate
YouTube is one of the best passive income ideas of all time because you put in a lot of time now at first, but once you get to the point where you have hundreds and hundreds of YouTube videos out there, they’re like little pieces of real estate that just keep bringing in income.
Spencer has churned out over 100 videos and he's planning on churning out a couple hundred more. His average video probably brings him $10-$30/month, but if you’ve got hundreds of videos out there and they’re all doing that, you can see how he's built up a nice passive income that can last for years and years. Spencer is constantly traveling and out enjoying his life and his income changes very little while he's doing that.
Spencer's first win on YouTube is still out there making him money. If you search “how to read stock charts,” you can see that his video on his Wealth Hacks channel still comes up first after several years. He made a really crappy video, but YouTube decided to rank it and he still churns out over $100 a month from people watching that video.
The really amazing part is that he didn’t even know what he was doing back then! So, there is tons of potential on YouTube even for people who are beginners that quite frankly suck on camera but are willing to try and put out content.
There are a lot of ways you can start making money off of your videos once YouTube starts showing them in the search results, which increases your passive income even more:
- YouTube will send you money for views once you meet their requirements (which is what we mean when we say an average video makes $10-$30/month).
- You can also send people to an affiliate link like we talked about in the beginning of this video. Mention it in the video and then add a link to it in the video description. That greatly increases your passive income.
We’ll show you some other ways to monetize your videos later in this article as well!
Passive Income With Email Automation
You are probably on a dozen email lists. A lot of you are probably on our email list and you get emails every couple days from Spencer and other marketers trying to sell you different things. And that’s not a bad thing – it’s called email marketing.
The way that you make this into passive income is to turn it into an email automation system. For example, we have an autoresponder that’ll automatically send out emails for us based on criteria that we set. We have it set up to send out emails to our subscribers every 2-3 days.
Once again, we put a lot of time in up front to build out those emails, but now we have an email sequence that is about 4-6 months long that will automatically send out emails whenever someone opts into our list.
We are continuing to build this out to be a year long. Spencer's dream is actually to build it out to be 2 years long!
You can capture a bunch of email addresses with Facebook ads, YouTube, Facebook organic, etc. There are a lot of ways to capture email addresses and we have a lot of videos that talk about building an email list, but the key here is to build out a nice long automation or a sequence of emails that do the selling for you.
How to Make Money With Email Automation
What Spencer does is set it up to sell affiliate products. You could set it up to sell your own products or to sell dropshipping products, and there are a lot of different things you can do, but probably the easiest, most passive way to do it is with affiliate marketing.
You do a lot of work up front to get thousands of people into the email automation, and then you can sit back and they’re going to go through this email automation and it’s going to be selling them all these different products.
Spencer has created a course on how to do all of this. It’s not as technical as you’d think but you probably want to grab the course. It’s free, but he will require an email address – wink, wink ;)
Email Automation Course
A step-by-step training on how to create powerful email automations that create raving customers and increase profits
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Affiliate Marketing With Adwords: The Fastest & Easiest Method
Spencer has a few passive income ideas that are his absolute favorites, and this is one of them because it is quick and easy to set up. It does require some up front money, but you'll likely earn more than you spend right away, so we've included it in the “how to create passive income with no money” section. It’s affiliate marketing using Adwords.
When you search a brand in Google, there will often be an ad that shows up, and especially if it is a well-known brand, those ads are being put there by the brand itself.
But, some brands (typically the smaller ones) do not run their own ads. Those brands will often have affiliate programs and that means you can run an ad to that affiliate program using your affiliate link.
Let's look at Apple as an example. (NOTE: You are not allowed to do this with Apple so don’t try!) But for the sake of this example, let's say you sign up to be an Apple affiliate.
Then, you run ads on Google Adwords so that when someone searches Apple or iPhone or whatever, your ad shows up, and they click your ad because they’re already looking to buy that product, and then when they buy it, you receive an affiliate commission for it.
The Keys to Success With This Passive Income Strategy
There are two keys that determine the success of this strategy:
- Find the right products/brands to promote.
- Get your ad spend to be less than what you earn in affiliate sales.
There are tons of products that you can do this with. Spencer has done this with about a dozen products and has seen great success.
We suggest Googling the products that you are affiliates of and see if they are running their own ads or not. If not, it's an easy thing for you to set up and earn some quick cash.
Now, there are some compliances to be aware of with this strategy. You want to make sure the company is okay with you doing this and that it isn’t something they are against. Just read their terms and conditions or reach out to them or look and see if other affiliates are already doing it.
The Easiest of the Passive Income Ideas
Out of all the passive income ideas we are presenting you with today (and probably most of the ones that are available everywhere), this one allows you to actually start making passive income without much upfront work. It does require money to run the ads, but if you do it right, you will make more than you spend.
It only takes about an hour to set up these ads because Google ads are only like 5 lines of text. They are very easy to set up and once they are set up, they can run indefinitely. If you’re spending $100/month and making $200/month or if you’re spending $1000/month and making $2000/month, you are profitable.
The only hard thing here is to find the right companies that offer this and you can sit there and earn passive income for years.
Now, imagine if you combined this with a recurring affiliate program and you can see just how much potential this strategy offers.
Real Estate Passive Income
Real estate passive income obviously requires money, but there are ways to do this with a lot less money than you'd think. We’re going to go over that method first and then we’ll go over a method for people who have money to burn too.
Real Estate Passive Income Option 1
The first method is the way Spencer and his wife bought their first house. It’s called an FHA loan, and it’s for first time home buyers, so if you haven’t bought a house yet, this method is for you.
The cool thing about an FHA loan is you can use it on a duplex, a fourplex or a single family home. That means you can buy a fourplex with an FHA loan, which requires only like 3% down, and you can live in one unit (you have to).
Even cooler than that, if you aren’t making enough income to purchase a fourplex, you can use the rent money coming in from the other three units and count that as income to help you qualify for the loan.
What this means is that you can purchase a fourplex in a lot of places for only $9,000-$10,000 down, and you can get a duplex or a single-family home for like $4,000-$5,000 down. That means it's totally possible for everyone.
The way we recommend doing it is buying a fourplex and living in it for a couple of years and then you can move out and rent out all four units, so that you have a property that is churning out at least $200-$700/month in income if you buy the right property.
That's how making passive income with real estate is possible even if you don’t have a ton of money to dump into something.
Real Estate Passive Income Option 2
The second way which is how Spencer now buys real estate is called turnkey real estate options. This is for people that have some money but don’t have a lot of time or expertise about real estate, and as far as passive income ideas go, this one doesn't take much work at all.
What you do is you go to these turnkey real estate companies and they’ll hire the realtors and property management companies, they’ll find the properties, they’ll get everything set up, and they’ll take care of the repairs so that all you have to do is approve stuff.
They’ll give you the numbers and say, “Hey does this all make sense here? You’re going to bring in $200-$300/month with this much investment. This is how long it’ll take to recoup your costs,” and you pretty much just sign off on things.
It’s a really cool method because you don’t have to be an expert and you don’t have to have a ton of time to search out the deals, but you can still get some passive income set up.
Here's an example of how it works:
- They’ll find you a good rental property
- They’ll give you the numbers
- You’ll approve it
- You’ll put down the downpayment
- They’ll help you get the financing
- They’ll get the property management company set up
- You’ll pay your mortgage and your property management fees for lets say $900/month
- They’ll rent it out for $1200/month.
- You’ll now make $300/month in passive income.
At Buildaprenuer, we tend to like digital real estate better than physical real estate, but there are obviously some perks with physical real estate. Obviously, it’s backed by a physical asset and you can sell the house and recoup your costs and potentially even make money on the sale.
Spencer uses all of these passive income strategies with much success, and what you might have noticed is that affiliate marketing is the glue that holds most of these methods together since there are multiple ways you can make passive income with affiliate marketing.
If passive income is something you want to build for yourself, affiliate marketing is one of the best things you can learn about. Here are some simple steps you can take to do that:
- Subscribe to our YouTube channel.
- Take this free training on how to get started with affiliate marketing.
Remember to stay consistent and accept delayed gratification because if you can't do that, you can't really earn passive income, but if you can, you'll set yourself up for a lifestyle that is full of freedom and fun.
Affiliate Marketing Training
Learn the process Spencer used to generate 7 figures of passive income with affiliate marketing
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