4 Kinds of Passive Income to Eliminate the Need to Exchange Time for Money - Side Hustle Nation

      Side Hustle Nation is focused on enhancing your personal earnings. To achieve this, we frequently collaborate with companies that share a similar mission. If you register or make a purchase via one of our partners' links, we might earn compensation—at no added cost to you. Find out more. Who doesn’t desire passive income? It’s a common aspiration, but attaining it can be challenging.

      So, where should you begin? Your starting point, interests, and long-term objectives will dictate your approach. We’ve discussed various forms of passive income on the show previously (which are more about time-leveraged income). However, today I will categorize them into four distinct types of passive income to help you identify which aligns best with your situation.

      Listen to Episode 672 of the Side Hustle Show to uncover:

      the 4 types of passive income you can begin developing today

      real-life stories from individuals who transformed everyday assets into income streams

      practical advice on saving money, earning on autopilot, and regaining control of your time

      Mint Mobile — Reduce your wireless bill to $15 per month!

      Indeed — Start hiring NOW with a $75 sponsored job credit to enhance your job posting!

      OpenPhone — Get 20% off your first 6 months!

      Shopify — Enroll for a trial at just $1 per month!

      1. Acquire Cash-Flowing Assets

      This represents the “make money with money” strategy, ideal for those who already have capital to invest. Excellent options include dividend investing, business lending, real estate, and other asset-backed ventures.

      Real Estate

      Rental real estate stands out as a quintessential example and might even be the most prevalent side hustle globally. Dustin Heiner from Episode 387 remarked, “Explore the entire state; focus on populous areas with a higher number of properties, and narrow it down to that city… Assess if they meet your criteria, your investment amount, the type of properties desired, and the expected rental income.”

      That’s merely the beginning. Dustin stressed the importance of structuring a business around the asset. Consider each property akin to a box of candy bars in a convenience store. You wouldn’t just launch a stored without shelving, cash registers, cold storage, or staff. The same principle applies to real estate. He dedicates only 30 minutes a month to his portfolio, thanks to the right systems and team, including property managers (his quarterbacks), realtors, contractors, and bookkeepers.

      A key takeaway he shared: losing his government job forced him to reassess everything. He owned 1 or 2 properties then, but that was sufficient to transition his identity from employee to investor, adopting the mindset of “my day job is now my side hustle.” This perspective took a decade to foster into full-time freedom but began from a low point.

      Dividend Investing and Real Estate-Backed Loans

      This category also encompasses short-term real estate-backed loans through platforms like Groundfloor and dividend investing. I spent years cultivating truly passive cash flow from dividends and interest, aiming for monthly milestones: $1,000, $1,500, $2,000. It’s super passive, though perhaps not the most thrilling ROI.

      Vending Machines

      Vending machines represent another popular side hustle fitting into this category. After purchasing a machine and initial inventory, they can generate income 24/7 without your presence. A prime location could yield profits exceeding $500 per month, and the risk is minimal; if one site underperforms, you can try another.

      Mike Hoffman, known as the Vendingpreneur, showcased this in Episode 599. “A new vending machine manufacturer’s best analogy resembles a car dealership.” He financed brand-new machines with no down payment and pays about $170 monthly. With decent product markup, Mike nets around $800 monthly from a $1,500 machine. Subtracting the $170 payment means he remains well in profit, later reinvesting gains into more machines.

      Buying Small Businesses

      In Episode 571, Hannah Ingram drew inspiration from Warren Buffett’s quote: “If you don't find a way to make money while you sleep, you will work until you die.” Thus, she explored businesses that generate income while she's not actively involved: car washes, laundromats, storage units. She discovered a dilapidated car wash in her hometown priced at $150k. After negotiating to $140k with seller financing, she financed the purchase through business profits.

      Others, like Link Moser (who bought web hosting businesses) and Jono Santamaria (who purchased a laundromat), followed similar strategies.

      2. Build Cash-Flowing Assets

      This represents the option requiring sweat equity—creating something valuable, such as a digital product, app, book, course, or YouTube channel. It demands time and effort upfront, but if executed effectively, it can often operate passively for years to come.

      One favorite method of mine is in the realm of printable