If you love the idea of generating passive income but don’t have a lot of money to start, you are in the right place. I am going to show you 7 low cost ideas for generating passive income that you can start for less than $500.
They all cost $500 or less to start, with most of them being free. And some of them have the potential to make some really attractive returns over the long term.
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.
My ideas are somewhat unconventional, and some of them will require a bit of work to get up and running. But if you’re willing to hustle, these ideas can be perfect for you.
1. Rent Out Stuff
There are many ways to generate passive income from stuff you already own. What’s great about these strategies is that they are 100% free, and you can keep it as low-key as you want.
Rent out Your Extra Rooms through Airbnb.
This one’s pretty obvious 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. You should also check with your HOA and landlord if you have them.
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.
Rent Out Your Cars Through Turo.
You can also rent out your car when you aren’t using it through platforms like Turo. According to Turo, you can make hundreds of dollars a month doing this.
Check out their Calculator to get a sense of how much you could make renting out your car through this platform.
2. Peer to Peer Lending
The next strategy is peer-to-peer lending. You only need $25 to open up an account, so it’s a really accessible option. If you don’t know what peer-to-peer lending is, it’s where you lend money to various borrowers through an online platform.
Some of the major platforms in this space include Prosper and Funding Circle. Many peer-to-peer lending platforms are not open to individual investors, so be mindful of that when looking around.
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 interest you. The topic you write about is often referred to as a “niche.”
A big plus of this strategy is that you don’t need a lot of money to get started. You will need to get a domain name and hosting services. You can get a domain for less than $10 from places like name cheap.
You can get hosting from companies like Bluehost or Siteground, which can be less than $5 per month. That’s pretty much it. You can choose to buy a few extra things like premier themes and paid plugins, but you really don’t need them.
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. Once you get traffic to your blog, you can sign up for ads to run on your website and get paid each time a visitor sees that ad.
You are literally making money in your sleep at that point. While it would be disingenuous to say blogging is 100% passive, with this business you have no customers, no inventory, no employees, no physical location, and very few operating costs. It may not be perfect, but it’s pretty damn good.
4. Real Estate Crowdfunding
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. And they get paid when the investment generates returns.
The good news is that this is completely passive. The bad news is that, in many cases, these real estate crowdfunding platforms have steep
minimum investment requirements and also require that you be an accredited investor.
But there are exceptions. Fundrise and Diversyfund are both popular platforms that have reasonable minimum investments and don’t require you to be accredited.
If you like writing, but blogging is not for you, you can write an eBook and get royalties from selling it online. Amazon KDP is a great place to do so.
It’s free to use, although they will take a cut of your sales. Still, it’s nice that you can get started with absolutely no cost. Like with blogging, once written, the book can continue to provide you with passive income for years.
6. Cash Back Credit Cards
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 dollars per year.
I throw every expense possible on my credit cards and earn thousands of dollars worth of cash or other benefits per year. They key is to find a good cash back card that pays at least 2% cash back.
Of course, you also need to make sure you pay the full balance each month. As long as you stick to that formula, you can collect 100% passive income for buying things you would be buying anyway.
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 watch hours and subscribers.
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 good content, have compelling titles, and great thumbnails. You also need to understand how YouTube’s search algorithm works.
That being said, you can start gaining traction much faster on YouTube than with blogging. And if you connect with the right audience, you can make some serious money.
The cherry on top is that you can get started for no money at all. If you want to do videos where you record yourself, all you need is a decent phone. Or you can choose to do voice over videos, where you don’t even need a camera.
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