Can you imagine a life where you didn’t have to work every day? Instead of needing to work you could work because you wanted to or, you could choose not to work because you wanted to. How? By building a passive income.
Conventional wisdom tells you that the path you’re supposed to live looks like this:
- Go to college
- Get a Good Job
- Get Married
- Take out a loan for school, your wedding, a car, furniture, a house
- Work hard for 30+ years to pay off all the debt you accumulated
- Maybe you’ll have enough to retire and then again, maybe not
The truth is that there IS another way to live. You don’t have to go the traditional route. After all, you are the one in control of your life. You can do anything you want.
Isn’t that a freeing thought? To know that you’re in the driver’s seat of your own life? For me it is.
One thing that has been on my mind a lot, and that I have begun to work toward, is creating passive income so that my limited time isn’t constantly being exchanged for money. And because I’ve always had a fascination with passive income I’ve really been drilling down on it lately and not only learning more, but taking action.
I think most people could happily live on $50,000 per year (provided they had no debt) so I thought it would be a good idea for you and I to explore some ways to make $50,000 per year without working.
Note: This article isn't some fluffy thought about never working and simply earning money. This article focuses on potential investment strategies that could net you $50,000 in residual income.
First, let’s go over how this whole thing works.
Frontload Your Life
Robert’s favorite financial hack is frontloading your life.
Frontloading your life is working hard now so that you don’t have to work so hard later. It’s kind of like making a snowball. At first you’re packing the snow and rolling the ball around to make it bigger. After a little work your ball starts to roll down a hill and gets bigger and bigger and bigger, all on its own.
At this point the momentum of the snow ball rolling starts to work in your favor.
That’s what frontloading is all about. And that my friends, is exactly how you can earn $50,000 per year without working.
You have to work hard upfront and then in anywhere from 10-30 years (depending on how much you invest and how smart you are about the way you invest) you’ll earn a good amount of passive income.
Here are just a few ideas for earning $50k per year without working.
Own 10 Rental Properties that Net You $420 Per Month Each
Ten rentals properties that provided you a net income of $420 per month after figuring in things like vacancies, maintenance, repairs, property management, taxes, and insurance would bring you in $50,400 per year.
Depending on the locations and types of properties you have, it may take more or less properties for you to reach that $50k per year mark.
If rental properties are something you’d like to get into I’d highly suggest that you start doing learning now. Real estate is something that has always interested me and from my research it seems like everyone has different goals and different criteria for how they choose their investments.
That means you’ll need to create your own path and consider your risk tolerance to reach your particular goals.
How To Become A Real Estate Investor
Your parents and grandparents think in order to invest in real estate you need to come up with the money and buy something on your own, right?
They are so wrong. In 2012 Congress passed the JOBS Act which allowed companies to market private investments to the public for the first time. This resulted in a brilliant new industry called real estate crowdfunding.
What real estate crowdfunding companies do is allow investors like you and me to pool our funds and buy multi-million dollar commercial properties or $300k single family homes - whatever we agree on. The returns on these investments are distributed according to how much each investor contributed.
There is no shortage of real estate crowdfunding platforms, so I recommend doing your due diligence and reading my thorough reviews of the most popular ones. If you’re looking for a quick recommendation, however, check out these guys:
1. Fundrise - These guys only require $500 to get started. Open an account here.
2. Roofstock - Takes online shopping to a whole new level. You can buy single family cash-flow positive homes online! This is a great way to get started owning your own rental property. Check it out here.
3. EquityMultiple - Invest in larger residential and commercial properties. This is for accredited investors only, but has a large variety of properties. Open an account here.
Accrue $1,250,000 Worth of Dividend Stocks with a 4% Yield
This particular method appears, at first glance, a little harder to achieve than the rental property scenario, but stick with me please. The thing is, this method is actually very similar. With dividend stocks you’re still buying an asset that provides you cash flow.
Dividend stocks are great because while these stocks pay dividends they can also appreciate (or depreciate) in value. This means that you’ll still get to take advantage of compound interest of the value of the stock. Plus you can reinvest your dividends until you reach your desired amount.
The cool thing about dividend stocks is that when it comes time that you need the dividend checks to live off of you don’t have to touch the underlying assets. In other words, you don’t to have sell your stocks in order to get money. The value you have in stocks still has the chance to compound and grow without you ever adding anything else to it!
And since you get to take advantage of compound interest and can reinvest your dividends while growing your nest egg, you are not actually contributing that full $1.25 million.
Ready to start investing? Check out these top places where you can invest for free, or here's some of the best bonus offers right now to get started:
1. M1 Finance - Truly free investing! This is our favorite platform for investing in dividend paying stocks because you can build your whole dividend portfolio, and it's free! Open an account at M1 Finance here.
2. TD Ameritrade - This is a classic brokerage company, but they are giving you up to $600 if you open an account. Their IRA's have no minimums, and they charge $0 commissions for stocks, ETFs and and options. Check out TD Ameritrade here.
Invest In A Business
I don’t want to sound all 4 Hour Work Week here but outsourcing a business is possible.
My Dad owns three businesses – 2 department stores and one greenhouse. He works at one of these businesses. The other two are outsourced. Different family members manage the other two places and there are also managers for different departments and, of course, employees.
There’s simply no way that he could be run all three businesses by himself and quite frankly, he just doesn’t want to.
I’ve tried copying this method into my own online business and so far am headed in the right direction. For instance, there’s a couple parts to my businesses. First there’s freelancing. Freelancing is very much active and requires my direct involvement. I can’t hand this off to other people.
The other side is blogging. My own blog generates around $2,500-$3,000 per month and I normally spend around 5-7 hours a week on it. I used to spend much more time on it until I started to outsource. I hired out social media and brought on a writer to help with the workload. My expenses rarely ever exceed $500 per month.
If you're curious about starting a blog, read this guide. I used Bluehost to get started with a website because it's super cheap - a free domain name and $2.95 per month to host it. I love Internet businesses because of this extremely low overhead and huge income potential. Our Bluehost deal is specific to our site, so if you want to start a website, make sure you get our $2.95 hosting deal from Bluehost.
This means I’m now netting around $2,000-$2,500 per month from a blog I enjoy running while only spending 20-28 hours per month on it. That nets me around $75-$100 per hour. While it’s not completely passive it’s headed in the right direction and sure beats my old day job that paid $11.50 per hour.
It is completely possible for you to build a business in any area you enjoy and then outsource once you get systems in place. This doesn’t happen without a bunch of initial hard work. It’s all about frontloading.
You Need Time or Money to Get Started
You either need time or money to get started building these streams of income. It will require hard work and sacrifice upfront but will be completely worth it in the end.
This methods are not get rich quick scheme and are not scams. There are people doing this type of stuff every single day. If you take responsibility for your life and work hard I promise you, you can make something like this happen, too!
Further reading: Passive Income Ideas to Build Real Wealth
Do you think it's possible to earn $50,000 per year in passive income without working?
Michelle says
These are all great ways! I am currently working on increasing my passive income. It’s been growing significantly but I would like to make it just a little more passive by outsourcing more work.
Alexa Mason says
Oh yeah – you are doing amazing Michelle!
Jason B says
I believe that it is very possible to make $50,000 per year without working. I’m in the process of trying to create more income with my blog. I also have an affiliate website that I’ve been working on. I recently updated it. Hopefully the updates bring more traffic.
Alexa Mason says
I hope your hard work pays off! It took me about two years of hard work for my online income streams to start to pay off. The work was definitely worth it!
shawn says
I’m wanting to start a blog. How do I even begin? I have a little money and lot of time
Robert Farrington says
Here’s our step by step guide on How To Start A Blog Or Personal Website
ray williams says
hey Jason,
Saw your post. How do you make money with a blog?
Ray
Jaymee says
This is great!! I was playing with the idea of real estate rentals and your example puts it in realistic perspective for me. I’m sharing this and bookmarking it for my own purposes!
Alexa Mason says
I’m glad it helped 🙂 If you’re interested in rental properties I definitely recommend you check out affordanything.com Paula has some amazing content on real estate investing.
Jason @ Phroogal says
Yes, this is definitely doable. I love the idea of traveling while earning money. $50k net would mean you could spend $137/day without ever dipping into your savings. That’s a TON of money for travel.
Alexa Mason says
That is a ton of money for travel. If you planned to travel you could go really far on $50k per year.
Tawcan says
Definitely possible to do. We’re trying to do this with dividend investing. Reinvest dividends and let them compound over time is a very powerful tool to use.
Alexa Mason says
I love it! Good for you for taking action. Definitely a very powerful tool.
Kurt says
Wow, I gotta get busy on that $1.25 mil portfolio! 🙂
Can I really own 10 rental properties and not have to do any work?? Wouldn’t a property manager’s fees pretty much skim my profit margin?
Alexa Mason says
Well, I think there are a ton of variables that would play into rental property profitability. It would first depend upon how good of a deal you got on a property. Most real estate investors say you should never purchase a home that’s monthly rent is less than 1% of the purchase price of the home.
The second factor would be property management fees. The only company in my area who (i know of) does it for 10% of rents. I could see rental properties run by property managers to be profitable in my area.
It would definitely depend on your location and how good of a deal you were able to get. Luckily, there are plenty of other options besides rentals 🙂
Chris says
I have six rental units which are a good source of passive income. I don’t use a property manager because you are right…they take about 10% of your rent. There are really only 2 things that tenants call about: 1. A plumbing issue 2. Heat/Air problems. Just find a plumber and heat/air guy you can trust. I travel a lot for my primary job. When a call comes in from a tenant, I can call the repair guy in just as easy as a property manager.
Turnover is what can kill profits with rental units because you have to repaint, clean carpets, etc. So, its important to screen for good tenants up front.
Rosanda Anderson says
Consider also using the rentals for assisted living or some other type of group home. You will receive income from the property and the business
Sarah says
Someday. 🙂 I don’t make much working from home, yet, but I’m optimistic that if I can find something that works for me and stick with it, it will happen. I’m refuse to quit.
Paul says
This was a great blog post! It really stretched my mind, which I love.
Do you think it’s possible to build a blog from scratch, outsourcing the work from day one (assuming I have some cash that can cover the initial expenses until the blog generates enough income to at least break even)? In other words, do you think you could you have spent your $500 max per month for the writer, social media expert, etc to build your blog to the point it’s earning the same amount of money it does now?
Yvette says
What Great Ideas. I’ll Have to look into the diviDen done since I dONot know much about it.
Candice says
As the saying goes, “it takes money to make money”, and of these passive income streams are the direct product of actually already having said money. How do those without that proverbial safety net, amazing credit or mommy and daddy, utilize the skills and knowledge that they have to do the same or similar?
Speaking now solely for myself, with the knowledge I have of real estate and flipping properties, I could easily make that happen. Unfortunately, in addition to that knowledge, I am also a barely paid teacher, living paycheck to paycheck with a ridiculous amount of debt from college. How do these ideas work for the rest of us?
Robert Farrington says
It does take some money to make a passive income, but money can be earned from working and from compounding on existing money.
If you’re working paycheck to paycheck, the goal is to break that cycle by earning more. Check out this list of 50+ ways to earn extra money on the side. I believe that everyone has the potential to earn $100 per month – and if you don’t think you can, email me and tell me why.
With that little extra money, you can invest and start building a passive income.
Shirley Tucker says
Where I live the average 3 bedroom house around $800,000. Can’t get into that market without at least $200,000 a year income and a minimum of $80,000 down payment. Almost impossible to do.
Robert Farrington says
Thanks for sharing Shirley. Why do you think accruing $80,000 is impossible? It just takes time. At the same time, that’s why you can start with crowdfunding like we mention above in the article.
Hazel Rightfield says
1. How do you make money with a BLOG?
2. You clearly have plenty of money already. Just more padding in your already cushy nest. This is not the story for a lot of people. Your title should be “How to become richer than you already are without working.” But, actually the investment one is the only one that would make money without actual WORK. Running rental properties is a lot of work, and so is running a business, or even a blog. Sooooo…..while there might be some truth to this, I think it’s mostly grass that looks greener because it’s on the other side of the fence.
Robert Farrington says
Hi Hazel,
1. You can make money with a blog via all sorts of ways – advertising, affiliates, your own product, and more. Here’s a good post on how to start a blog.
2. This article isn’t intended to be about making $50k per year from $0 to start with. This is intended to show different ways that it’s possible to generate $50k in passive income. As for your rental property comment, check out RealtyShares or other similar companies. You can be a rental property owner without having to run the business. You can be a limited partner and just invest in real estate, and leave the actual work to the general partner. Basically, there are options to make $50k without working, but like the first paragraph says – front load your life!
Kevin says
I think the term “work” means having a 9-5 job for a company that is not your own.
I just recently started a blog a month ago and although I haven’t seen any income from it, I plan to continue posting articles every other week to eventually generate enough traffic to one day make money from it. This is just a hobby though, not a get rich quick trick.
Robert Farrington says
All passive income requires some type of work up front. The passive part is when you can take your foot off the gas and still earn the income.
Great job starting a blog. Put in the work – think of it like a business and you’ll see results.
BigD says
I will share what we did, because it’s an incredible success story. We used an existing tax loophole where if you sell your primary residence (after having lived there at least two years) you get to keep your profit tax-free. So, we stair-stepped. We bought house after house, at least two years apart, used the profit money to pay down on the next house (so on and so forth, yadda yadda) building up equity as we went along… and now, we own a $600,000 house debt-free. And now we are using our paid-off home as leverage to borrow money to buy commercial buildings to rent out. I like commercial because it’s a BUSINESS transaction… kids, pets, other wear and tear that you see with residential rentals is nonexistent. People take care of their business space much better than residential. You have to be in a good area for renting out commercial – a thriving business community – to make this work. But that’s how we “made it”, and though it took 15 years, we will have residual income to take care of us when we’re old enough to retire. People made fun of us for moving so much, but who’s laughing now? 😉 Oh, and our child only had to change schools once (and we wanted to anyway) because we stayed in the same general area as we moved around. We were careful not to disrupt his life too much.
Chad Brown says
Great job, note the home upsizing works only in appreciating housing markets (I’ve done a similar this in CA but it was 7 years same home to gain almost 500k profit which is around the govt cap for tax-free home profits. What a gift! Thanks booming economy and generous govt taxation on home profits). Those proceeds bought our next house cash and invested the remainder in domestic stock (which has been equally profitable).
Also, use caution financing your primary residence for a rental. Should the rental go sideways you’re back on the street.
Arjan says
You actually don’t need dividend paying stocks to live of your stock investments. Dividend payments are incorporated in the stock price so just selling off some of your non dividend paying stocks when you need cash is in fact exactly the same as receiving a divident payment.
I’d actually be very cautious in investing individually is you don’t have this kind of very basic financial knowledge.
Robert Farrington says
You don’t have to invest individually to take advantage of dividend paying stocks (i.e. investing in an ETF like DVY, which currently has a 3.16% dividend yield – almost 4%). And while your math is indeed correct, there is more to dividend paying stocks that just the math. The reason the companies pay dividends is typically because of their underlying strength, steady growth, etc. These companies can be good investments for the long run. As such, it might not make sense to sell.
Chad Brown says
Agreed but I might consider a blended portfolio of large and small cap stocks using low cost mutual funds (I found a fidelity large cap fund FUSVX with a net expense of .035% that has also delivered 17%+ YTD gains, some are dividend some are growth stock in the fund) UNLESS you’re close to retirement. This way you get the growth upside on small cap paired with the stablilty of some large cap stocks while maintaining balanced ricks.
Nikki says
I think it’s worth mentioning that in order to do crowdfunded real estate you have to be an accredited investor, which means you have to earn an income of 200k+ per year, or have a net worth of one million dollars. In which case I wouldn’t need to figure out how to earn passive income!
Robert Farrington says
Hi Nikki – you actually don’t have to be an accredited investor anymore to invest in crowd funded real estate. While many platforms do ask that you are accredited, other don’t. For example, FundRise doesn’t require that you’re accredited to invest.
MaryB says
Hi Robert – I have zero experience with crowd funded real estate. How does it work if you want to sell?
Robert Farrington says
Every investment is different. You have to read the provision for return of capital. If you invest in a loan, it’s at maturity. If you invest in a property, it’s typically at the sale of the property. Sometimes there are refinance/buyout provisions as well, you just have read it.
BB says
What is the link to get started on building the dividend stock portfolio? I didn’t see it above.
How did you find your social media person for your blog and what do they do exactly? I have a business right now that needs me to loan it money right now, and I’d love to start a blog to help earn money to do that.
If you could answer these two questions, it would bea huge help!
Robert Farrington says
Hi BB!
I’m guessing you mean the bonus offers? Check the box right below the sentence – we recommend using Fidelity with the 2% cash back card, or the $150 Motif Investing offer. Motif is great.
As for the blog, here is our resource to start a blog: How To Start A Blog. To find someone to help, look at UpWork or the Problogger Job Board. Lot’s of social media people on those platforms.
Joaquin says
Hi Guys/Alexa,
First off, great article. Great job here Robert/Alexa. I am wondering. How much time did it take you to go from $0 to $2,500 per month with the blog?
I’m re-starting my blog goals again after being absent for a little while. Either for Robert or Alexa as I am unsure the story is from.
Robert Farrington says
I made pretty much $0 online for the first two years, but I didn’t know what I was doing. It took me about 15 months of working at it to average over $2,500 per month.
Anjeanette Gunter says
This is really encouraging.
I’ve been blogging for almost three years– and clearly don’t know what I’m doing.
1. Can you share any resources or tips that finally made everything click for you?
2. How soon after you started did you start guest posting (accepting submissions or writing on friends’/colleagues’ sites)? Did you see immediate results afterwards?
Robert Farrington says
1. Connecting with other’s, networking, listening/learning/watching/replicating what successful people are up to. There are millions of great resources out there – but it requires action as well.
2. I rarely accept guest posts (maybe 1-2 per year tops) and only from friends I’ve personally met in real life who want to contribute amazing value to my site. I maybe enjoy the same with others – one per year (and haven’t done that in years). There’s no immediate results in anything.
SK says
There are many comments about it being impossible to break into real estate with little money, or needing help from the bank of mommy and daddy. It is possible. I bought my first property, a multifamily, 6 months after graduating college, with a garbage job I got 3 months before and barely 7k in the bank. It’s now two years later and I’ve purchased a second this summer. Regarding management, I self-manage like most ‘small time’ landlords. Unless you own a massive apartment buidling, there’s no need to professional managment. Like another comment mentioned, I’ve only ever gotten heating issues or other minor things, for which I have a handyman to take care of. Aside from that, it’s fairly passive IMO. Dividend investing doesn’t require 100k either. It’s just an example the author used. I invest un securities with dividends ranging from 2-12%, and hedge/balance according to risk. Higher dividend % isn’t always better, but there are some good deals you can find. I think the key is to realize that you don’t need to stick to just one form of passive investment. Sure, 10 properties sounds daunting, and a $1M portfolio seems impossible, but you can combine both, as well as other passive income strategies. And ofc, the more risk you are willing to take on, the higher the potential reward (and loss). I day/swing trade, but wouldn’t advise this. It’s also not passive, I spend a massive amount of time researching and analyzing the technicals, but it’s worth it for now, as I’m fairly consistnet with profits. I have not tried blogging, and am not sure I’d be any good at it. I dabbled in ecommerce but found it was too time consuimg, but I know people who were able to quit their 9-5s from ecommerce. I’m sure no matter how much debt you have (i have 30k unsecured debt) or how little you think you make, there is a way to start investing today, even if it’s starting small.