Building passive income can be a great way to increase your household income. Learning how to build passive income as you go through life can set up your family for a more prosperous future. The practices in this article will help you learn more about passive income along with some of the best ways to do so while making the most of your time and resources. 

Why Passive Income is Valuable

Did you know passive income can help you change your financial future? It’s great if you’re trying to save for a down payment on a house, a new car, or to pay off student loans. You can also use this extra money to invest further and build more wealth. For example, if you’re investing in a rental property, you can put the money you make towards a second property. 

Building passive income can also come in handy in an emergency. For example, if you or someone in your household needs medical attention, having money set aside can make this expense much less detrimental.

How You Can Build Passive Income

#1. Purchase an Investment Property

Investing your money into another home can be one of the most profitable ways to make passive income. Although the initial investment can be high, purchasing an old house to renovate and flip or purchasing a home to rent out on sites such as Airbnb and VRBO can be great investments. 

Investing in real estate can be tricky and costly, but there are many benefits. Learning how to get preapproved for a mortgage can help you narrow down your search in terms of location, square footage, and amenities in the home so you can save your money for upgrades you want to make. The more upgrades you make in the home, the more money you can charge for people to rent out, increasing the passive income you build. 

House flipping is another one of the many ways you can invest in real estate. Whether you purchase a home to flip and sell or rent out the home to a long-term tenant, the money you make can become a savings account for future investments. Often, you can purchase these homes for a great price if they require a lot of work. Putting in the time and resources to upgrade the property can turn a quick profit. But keep in mind not every renovation will turn the profit you invest.

#2. Rent Out a Vehicle on a Car-Sharing App

If you own multiple vehicles, this can be an excellent way to make some easy extra money. Apps like Turo are easy to use and have a large consumer base. On Turo, you can list your car similar to how you list a home on Airbnb. People can then reserve your car and rent it out for a length of time. 

This can be tricky to get into if you don’t have experience, but Turo makes it relatively easy to sign up and has many resources for hosts. In addition, they offer insurance for those renting and different protection plans hosts can choose from. The great thing about this is that if you need your car, you can pause it on the app and relist it whenever you want. 

A pro tip to set you up for success: invest in cars specifically to list online. Then, you can see in the app what kinds of vehicles are prevalent in your area and choose a car that’s more likely to be rented out frequently. 

With every investment, there are risks, and this is no exception. For example, there is always a chance of your car breaking down or not being in demand as a rental, so it’s essential to research and learn about renting on Turo before investing in it.

#3. Invest in the Stock Market

Putting some of your extra money into the stock market is one of the most common ways to build passive income. If you set aside a portion of your paycheck each month to invest, you’ll be able to track the progress of your money in the stock market and see where you should invest next. Investing in the stock market is easy once you do the proper research, even if you’re investing as a beginner.

Using the stock market to make more money is great because you can put in money and take it out whenever you see fit. If you have some extra money lying around one month, you can add it to your portfolio. The same goes if you have a month where you incurred some additional expenses, it’s entirely up to you if you want to decrease your investment that month.

One advantage to investing this way is that the money will accumulate over time, and you don’t have to do any work other than your planned investments. In addition, this method is one of the best if you’re planning to use your passive income for retirement, as the money you put in the stock market is separate from your other savings and isn’t as accessible for you to spend elsewhere.

#4. Turn Your Favorite Hobby Into a Side Hustle

This option is a great choice for creative hobbies, like art, sewing, or DIY projects. There are many ways to make a quick profit from upcycling something you no longer use. Upcycling is when you take something previously damaged and give it some TLC to make it new again. People often do this with clothing and furniture.

If you enjoy sewing, you can buy old leather goods that have been damaged, purchase them for a low price, fix them up, and sell them on social media. You need to have specific skills for this, but you can do so many other things to make some extra money.

Another thing you can try is a DIY furniture flip. Facebook Marketplace is full of old furniture that people give away for free or sell very cheaply. Often, these items only need a fresh coat of paint and some new hardware to look brand new. Items with just a few minor updates can sell for upwards of $200 depending on the piece itself, which is an excellent turnaround after getting it for free.

If you have a lot of old furniture or clothes, you can sell them at a garage sale. Although a lot of planning and time can go into this, it can make you a great deal of extra money and help you reorganize and declutter your home. Coordinating this with neighbours and having a community-wide sale can also bring traffic.

Final Thoughts

Building passive income can set you and your family up for success in the future, and it’s crucial to begin doing this as early as possible. Whether you purchase an investment property or vehicle, invest in the stock market, or just do some small DIYs for extra cash, every bit helps.

As you begin to build your passive income, you’ll better understand how to invest. From there, you can grow even more and use the money you make to invest even further, especially if you want the extra money for when you decide to retire.