0:00:06 Everybody wants passive income. That’s the dream. But how you go about getting it is the
0:00:10 hard part and which path you choose depends on your starting point, your interests, your
0:00:15 long term goals, all that stuff. Now we’ve covered a ton of quote unquote passive income
0:00:20 ideas on the show, or maybe more accurately, time leveraged income ideas, ways to make
0:00:24 money without directly trading your time. But today I’m grouping those into four different
0:00:28 categories, four different types of passive income that you can start making. So you can
0:00:33 see which might make the most sense for you. The first is to buy cash flowing
0:00:39 assets. This is the make money with money option. And under this category of cash
0:00:43 flowing assets, you’ll find options like dividend, investing, business lending, real
0:00:48 estate, and stuff like that, which is great if you already have money to invest.
0:00:53 Rental real estate is probably the classic example of this and might be
0:00:57 statistically one of the most common side hustles in the world. Buy a house, rent it
0:01:02 out, pocket the cash flow. Here’s how Dustin Heiner explained it in episode 387.
0:01:08 The way to start is to number one, find which state you’re going to invest in and
0:01:12 then zoom into which city you’re going to invest in. And the way you do that is I
0:01:17 usually use Zillow. Zillow is a great site to get big, broad picture. Actually, it’s a
0:01:22 start. As we look through that, it’s a tool for us to do more due diligence. And that’s
0:01:25 basically just making sure we’re making the right investment. But you’re looking at the
0:01:30 entire state. Look for population areas that have a lot more properties than not. And you
0:01:34 zoom into that city and you get even closer and closer. And you’re going to look at all
0:01:40 the different properties in that specific city to see if they meet your criteria, how much
0:01:44 money you have to invest, the type of properties that you want and how much rent it’s going to
0:01:48 make. So you’re making, and here’s, here’s a principle for everybody listening. You want
0:01:55 to buy for $250 or more in passive income after every single expense that goes into your pocket?
0:02:00 Because that’s how I provide for my family. I have 30 plus properties now. And so we literally live off
0:02:05 of a real estate. The next thing we do is build the business, finding the right people to actually run
0:02:11 the business for us without us doing any work. Because with all my properties, I literally only work
0:02:17 30 minutes a month, 30 minutes a month for every single one of my properties and other people do the
0:02:21 work because I built the business. Now, let me give an example of what building a business looks like. If
0:02:25 you’re going to start a convenience store, you’re not going to just get a location, open door, put a box of
0:02:30 chocolate candy bars in the center, and hope to run a business. That’s essentially what you’re doing if you
0:02:34 just buy a property anywhere without building the business. No, you’re not going to do
0:02:37 that. You’re going to get the gondolas, which are the shelving units. You’re going to get the
0:02:42 countertops. You’re going to get the fountain machines, the cold storage, the cash registers, bank
0:02:48 accounts, employees. You’re going to build the entire infrastructure before you put one piece of
0:02:55 inventory into that business. And when you’re doing that, you now have a solid business. Every piece of
0:03:02 property with my 30 plus properties now, I literally view them as inventory. It’s not a home for me to live
0:03:07 in. It’s a piece of inventory, just like a candy bar. So once I have the business built, every new
0:03:13 property is like another box of candy bars inside my business. And I could just keep adding and adding
0:03:19 and adding into that business. Does that make sense? Sure. So this is, you’re talking about like the team being
0:03:25 the property management, the realtor, perhaps the handy person to come out and fix stuff when it breaks. Like, is
0:03:31 that what you mean? Your number one person is your quarterback, and that is your property manager. So you, what I
0:03:36 suggest is I literally have all my students interview six different property managers, because you’re going to make
0:03:40 that this is the number one person you’re going to work with. There’s so much to talk about, which we
0:03:46 can’t go into that right now. But your other people you’re going to get are many wide receivers or
0:03:50 running backs, if you know a football analogy. So these are the people that are going to be making
0:03:55 plays for you. And these are realtors. These are wholesalers. Wholesalers are basically like
0:04:00 realtors, but they’re not licensed. They find sellers and they find buyers and put them together. You’re going to
0:04:06 find other investors that are willing to sell. You’re going to find other ways to find properties, seller
0:04:09 financing and all that sort of stuff. You’re going to get somebody on your team that’s going to be doing
0:04:12 your insurance. You’re going to get somebody that’s on your team that’s going to be doing your finances.
0:04:17 You’re not just finances, but funding. Make sure you get mortgages and things like that right. And even
0:04:24 handymen, contractors, roofers, plumbers, you’re going to get all this stuff developed and know that you will
0:04:30 absolutely have a business built before you buy that property. Because I’ll give you an example of a big
0:04:36 reason why I never fly anymore is I flew to Illinois. I went to Springfield, Illinois, a great town,
0:04:41 great place, but I literally could not find a good property manager. And I thought, man, I flew all the
0:04:45 way out here and I can’t find a property manager. I can’t buy a property because nobody’s going to manage
0:04:50 it. Or at least I could not find somebody. All this time and everything was wasted. So now I literally do
0:04:55 everything remotely through the phone, through internet and all that sort of stuff. And I found there’s no need
0:05:00 to actually fly to another city ever again to even start a brand new place. And especially all my
0:05:06 students have literally done that as well. So yes, building the business is getting your team, getting
0:05:11 the infrastructure of your business so that it runs for you automatically and makes you money every
0:05:17 single month. Now having that team in place is what it allows real estate to be a passive income stream
0:05:23 for Dustin, because there are many a burnt out landlord who will tell you that it’s anything but if you
0:05:28 don’t have that infrastructure in place. Now, the most powerful thing that Dustin said in that interview
0:05:33 actually came at the very end of the call. And it was him describing getting laid off from his
0:05:40 government job, the job he thought was super secure. And in that moment, the identity shift of becoming
0:05:46 an investor first, a real estate investor first, and an employee second, because he did, you know,
0:05:50 he went and found another job. And he might have only had one or two properties at that point,
0:05:56 but he saw the way out. And he said, look, it took another 10 years to build the portfolio to build
0:06:02 up that cash flow. But it started from that really low point of getting laid off and shifting the
0:06:08 mindset. My day job is now my side hustle was kind of how he phrased it. So that is episode 387
0:06:14 in your archives. If you want to go back and check that out. Another popular side hustle I would put in
0:06:19 this category of buying cash flowing assets, it would be vending machines. So you’re going to pay
0:06:25 upfront for the machine for the inventory, but then they can make sales 24 seven without having you
0:06:31 around. If you find a good location, they could easily generate $500 plus per month in profit. And
0:06:36 it’s a matter of stacking those up, stacking locations, adding more machines and and building
0:06:42 that route to get to your income goal. The other cool thing about the vending businesses is pretty
0:06:47 low risk. If one location isn’t working, it’s portable, you pack up that machine and try someplace
0:06:53 else. Here’s part of my chat with Mike Hoffman from episode 599 on how he got started as a vending
0:06:59 preneur. So you get your first yes from this apartment building, this athlete or student apartment
0:07:02 building. And then you start looking around, well, how am I going to get a machine? Walk me through
0:07:07 what happens after that. I literally Google vending machines. You kind of got two routes here. You got
0:07:14 the, you go down the use path, look on places like marketplace and Craigslist and even local refurbish
0:07:20 type places like appliance type places. And then you got these new places. And the best analogy I would
0:07:25 use is a new vending machine manufacturer is very similar to a car dealership. So I called them up.
0:07:30 They’re like, all right, Mike, the machine you want, it’s going to be about $5,500. Do you want to pay
0:07:34 for it upfront or do you want to finance it with zero money down? And I was like, okay, tell me
0:07:39 about your financing options. Like, oh, we can do it over 60 months. You can use profits to pay them
0:07:46 off early. And every single one now I’ve financed with zero money down and I typically have them paid
0:07:52 off in the first year just with profits. Okay. And that’s like the real estate mindset of leveraging
0:07:58 other people’s capital versus coming up with a hundred percent down payment. Yeah. And this is back to
0:08:02 the, like when I bought that a hundred grand house, I had to put 20% down and that just wasn’t
0:08:08 sustainable every single rental. So this is where with vending, I just bought 18 grand worth of vending
0:08:12 machines, I think in October, and I didn’t put a dollar down. And the benefit there is that you got
0:08:16 something brand new. Cause I’m, I’m on a Facebook marketplace, of course, like, well, shoot, what’s
0:08:23 available to me from the 500 to a thousand dollar range. It looks like for some drink machines. Okay.
0:08:27 A little bit more than that for like the combo machines or the snack machines. I don’t know how
0:08:32 old they are. I don’t know if they have card readers, but there’s options if you want to minimize the
0:08:37 upfront sticker price of these things too. There’s definitely options. I got my first machine used and
0:08:42 then it broke after six months and I was like, I never want to do that again. I don’t want to be a
0:08:47 machine mechanic. None of that stuff. I just want this thing to run it. Are they like relatively reliable?
0:08:53 To what extent do you have to know the fixing game or do you have a go-to vending machine fixer
0:08:56 person that you can call? Like if something does break?
0:09:01 Yeah, that’s why. So ever since that first, when I got off Craigslist broke, I’ve only bought new
0:09:05 ever since. And so they’re under warranty. So if anything were to ever, I mean, you got to keep
0:09:09 in mind, these things have been around for decades, so they’re built to last. I mean, we’re talking
0:09:17 20 years plus. So they constantly are built to be robust and to be used. So if I ever have an
0:09:21 issue because mine are under warranty, I just FaceTime them when I’m at the machine, they do
0:09:26 their little troubleshooting thing. If there’s any issues, they just overnight me apart. And like I
0:09:30 said, I don’t want to be the mechanic. Yeah, that becomes a little bit less passive at that point.
0:09:36 Exactly. So walk me through the math here. So new machine, 5,500, you’re financing that over a period
0:09:42 of several years. What’s typical payment? Typical payment is right now with interest rates are around
0:09:49 170 bucks a month. Your first payment isn’t due until 90 days after it’s installed on site. So
0:09:56 you’re going to do 90 days of revenue before your first $170 payments due. And then it’s $170 a month
0:10:01 typically. And that’s just based on today’s rates of let’s just say eight to 9%. I don’t know.
0:10:07 I have one. Sure, sure. Yeah. Four years ago that my payments are $112. So they’re definitely a little
0:10:13 variable there. And then, yeah, you can just use profits to pay those off of those machines. I just
0:10:19 used as an example that are 170 bucks a month. I mean, we had one in January that just did over $1,500.
0:10:26 Okay. $1,500 of revenue minus your cost of product. You aim for a, what, like a 3X markup,
0:10:30 like stuff and vending machines. It’s not cheap. Exactly. You pay for the convenience. Yep. Yep. So
0:10:37 typically we’ll be around 35, 40%. So let’s just shoot high on expenses. Let’s say 40% of $1,500.
0:10:45 So what’s that? $650, $700 in cost of goods. Okay. So we’ll call it 800 in profit on that
0:10:52 $1,500 a month. Yep. Okay. Yeah. Minus your 170 in payment and you’re still in the black pretty
0:10:55 healthily and you pay it off faster if you don’t like paying interest and you can parlay that into
0:11:01 the next machine, next location. Okay. So you’re starting to try to see how this can work out and
0:11:06 you have so far minimized your overhead. Definitely recommend checking out that full episode if you missed
0:11:13 it number 599 in your feed. Mike breaks down his criteria on what makes a good location for him
0:11:19 in terms of residential building population, number of units or office building occupancy. Yes,
0:11:24 you got to restock the machines, but that just means you’re making sales. Also under this category of
0:11:30 buying cash flowing assets would be stuff like short-term real estate backed loans, like on ground
0:11:35 floor. It could be dividend investing. Like for years, I was focused on building up my truly passive
0:11:42 dividend and interest cashflow, setting new monthly milestone targets. Could I get it to $1,000 a month?
0:11:48 Could I get it to $1,500, $2,000? Very passive. Maybe not the most exciting ROI in the world. You can
0:11:54 sometimes generate better returns by looking for businesses for sale nearby. After all, that’s what
0:11:59 dividends are, right? It’s a portion of the company’s profits paid out to shareholders. I’ve got a fun
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0:14:29 need. We’re back and we’re talking the four types of passive income and which flavor might make the most
0:14:35 sense for you in your financial journey. The first type is buying cash flowing assets, which is
0:14:41 historically the takes money to make money option. But with a little creativity and finding the right
0:14:47 opportunity, you might be able to buy some cash flow with little or no money down in the form of a local
0:14:51 small business. Here’s Hannah Ingram from episode 571.
0:14:57 I read this quote by Warren Buffett that said, if you don’t find a way to make money in your sleep, you will work
0:15:01 until you die. That really just like hit me like a ton of ricks right there. I was like, it hits you,
0:15:05 right? Yeah. I was like, what can I do that actually makes passive income?
0:15:09 Yeah. And for most people, that’s like the traditional retirement path. Like I’m going to build up this huge
0:15:15 nest egg and you’re eventually going to live off the dividends interest appreciation or it’s rental
0:15:20 properties that I can build off that cash flow or I could build a business that spins off cash flow,
0:15:25 but it absolutely hits you. You’re like, well, shoot, I’d rather not wait or I’d rather not work
0:15:31 until I die. I’d like to have some optionality here. Exactly. That was my whole thought press and I think
0:15:38 really long term. So I was like, man, I am not going to work until I die. Like I’m going to be retired by
0:15:43 the time I’m 30, you know? So I was like, okay, I sat down. I was like, what businesses are actually
0:15:47 making money. You know, if I’m at the gym, if I’m hanging out with friends, if I’m out selling real
0:15:53 estate, showing a house or whatever. And that’s when I was like, okay, car washes, laundromats,
0:15:59 storage unit facilities. So like those were like the three that I really went hard and put a focus on
0:16:04 trying to acquire. Where were you shopping? I was looking around like on loopnet.com,
0:16:09 correctc.com. I was doing driving for dollars, kind of like the whole wholesaling method,
0:16:14 but with businesses and just scouring the internet. Can I pause you? What do you mean by
0:16:19 driving for dollars? So driving for dollars, I was like driving around looking for kind of like
0:16:24 ran down businesses and I would slide a note under the door. Okay. You know, with my number on it,
0:16:28 asking if they’re interested. Yeah. If they’re like the building is still there, but they’re not,
0:16:32 it doesn’t appear that they’re operational. That or it looks really ran down because I’m trying to
0:16:37 find a motivated seller. So I’m trying to find one that’s ran down that doesn’t look like it’s been in
0:16:43 business for a while or whatever. Okay. And so you come across, so a loopnet is one that I’ve heard
0:16:48 of. Crexie is new to me. And so I was just, you know, looking around what, what might be available
0:16:53 found a car wash for me, but they’re asking $2.4 million in Seattle. They’re like, uh, and it still
0:16:59 looks kind of run down. It’s like, it’s marked as like a development project or something. So was it
0:17:03 through one of those searches or had you come across the property that you landed on?
0:17:10 So I’ve been searching for forever. And apparently this car wash had just hit the market. I didn’t
0:17:15 even know it was listed yet. And a friend of mine told me about it because I had mentioned it to her
0:17:22 and she told me, she was like, Hey, this one’s for sale. It was in my same town. So I just hadn’t seen
0:17:28 it yet, but it was like up for sale. I just had not actually laid eyes on it being listed yet.
0:17:30 Okay. That’s great. So what’s your next step?
0:17:36 Next step was contacted the sellers, took a tour of the property, got the financials,
0:17:39 made sure this thing was actually making money. Then we went from there.
0:17:41 So what was the sticker price? Or do you remember what the sticker price was?
0:17:48 It was 150K and I talked them down to 140. So I got it for 140K.
0:17:53 And that’s based on a multiple of their last 12 to 24 months of earnings.
0:17:58 I don’t really know how they came up with the number, but that was just kind of what they threw
0:18:03 out there. That’s what they wanted. It included the business and the land or was it leased on top of
0:18:09 the land? Nope. Land, building, business, equipment, everything. Wow. I got to move to Tennessee. That
0:18:14 sounds way better than 2.4 million. Hannah went on to explain that she didn’t actually need the
0:18:20 $140,000 to close on the business. She was able to negotiate seller financing, basically borrowing
0:18:25 the purchase price from the current owner and then paying off that loan with the proceeds from the
0:18:31 business. I think at the time we recorded, it was earning around $5,000 a month. Creative, low risk
0:18:36 way to do it. And definitely an inspiring episode about finding that unconventional path, inserting
0:18:43 yourself into income streams that are already flowing. That’s episode 571 in your archives.
0:18:47 Now, we’ve heard from a couple other entrepreneurs in this vein. Link Moser went out and bought some
0:18:53 cash flow in the form of local web hosting businesses. It was something that he was already
0:18:57 doing. And I’m going to grow through acquisition, find other little mom and pop operators that have
0:19:03 a book of business, sometimes as little as 20 or 30 clients. But after that recurring revenue,
0:19:09 hosting and maintenance piece of it, Jono Santa Maria bought a laundromat. So keep your eyes peeled
0:19:16 for something that you might be able to apply your skills to and see what types of businesses might be for
0:19:22 sale. Jono had a background in digital marketing. So he was able to improve the online presence of the
0:19:28 laundromat ended up and making a couple other tweaks, but ended up tripling the revenue of the business in 12
0:19:34 months. And so I was like, well, I paid this price, but I have a feeling I’m going to be able to increase
0:19:40 that value. And the cool thing about it is because it’s a business asset, well, now I’m pocketing that
0:19:45 extra cash flow every month. But I’ve also, in theory, tripled the equity in that business as well,
0:19:50 or tripled the exit value of that too. So a way to build near-term cash flow and potentially long-term
0:19:56 wealth as well. And like Hannah described some creative financing ways to go about it too.
0:20:02 The second type of passive income is to build cash flowing assets. So if number one was the
0:20:08 takes money to make money option, number two is the sweat equity option, building something of value,
0:20:15 say a digital product, a book, an app, a course, a website that earns advertising revenue. These things
0:20:21 obviously take some time and energy to create and to market, but can run relatively passively,
0:20:28 often for years, if you set it up right. One of my favorite examples of planting little mini digital
0:20:34 money seeds is the digital product or printable business. And a lot of the time, sellers are relying
0:20:40 on Etsy organic search traffic or teachers pay teachers organic search traffic. So you don’t
0:20:45 necessarily need to start with an audience of your own. I loved how Cody Berman explained it in
0:20:53 episode 665 on how even low search volume terms, they can stack into significant income streams.
0:20:58 Those are the numbers he’s talking about in this clip, estimated monthly searches on Etsy.
0:21:03 I usually don’t touch anything under 50. And some people think that’s crazy. Some people,
0:21:08 some other Etsy quote unquote gurus don’t touch things that are under like 200. But for me, I’m like,
0:21:13 there’s 50 people searching for this a month and there’s zero competition. And I can scoop up,
0:21:19 say even 20% of them, 10 people buy my $5 thing. I like to think of these each as like a little mini
0:21:23 passive income machine. Like that’s 50 extra dollars per month. And that 50 adds up. Like if you can
0:21:28 get an army of these $50 per month products, even if they don’t have a lot of search volume,
0:21:32 you get 20 of those going, that’s $1,000 per month and mostly passive income.
0:21:38 E-Rank was the tool that Cody mentioned to estimate the search volume. We’ll link that up
0:21:43 in the show notes. Another type of digital asset that you can make money from is YouTube videos and
0:21:48 you don’t even have to sell anything. Lately, the Side Hustle Nation YouTube channel, as a point of
0:21:54 reference, is earning $20 to $30 a day in what I might call relatively passive income. And I say
0:21:59 relatively because, yeah, it took some time to create the videos, but it tends to stay fairly consistent
0:22:05 whether or not I upload anything new. Now, of course, the goal is to keep stacking evergreen videos
0:22:10 that have that long shelf life where some of the top performing ones are stuff that I uploaded years
0:22:18 ago. If you can add 10 more $100 per month videos, that’s another $1,000 a month to the bank.
0:22:23 Insurious YouTubers are going to say, dude, you’re shooting way too low. That’s a really modest goal.
0:22:28 And they can make tens of thousands of dollars from a single popular upload. But the idea here,
0:22:34 create something once, get paid over and over again. That’s the hope anyways. In my case,
0:22:39 like five to 10 minute videos, mini digital assets, a lot like the printables that Cody was talking
0:22:46 about. Now, lately, I’ve been using a tool called Pictory to pull in a bunch of B-roll clips in just
0:22:51 a few minutes. That’s really sped up the process. I’ve got a demo slash review video with a promo code
0:22:57 I can link up in the show notes if you want to check out that tool. And sometimes the video asset that
0:23:01 you create doesn’t even have to be that long. Like we’re talking five to 10 minutes in the example of
0:23:06 YouTube. But with the Amazon influencer program, sometimes a one to two minute product review
0:23:12 video can take off and generate some serious income. I think most of what makes you successful
0:23:18 as a product reviewer has remained constant. You have to, it’s work. You have to put in the time.
0:23:23 You have to be fairly consistent. There were a lot of people who started around the same time I did,
0:23:31 who worked really hard for six months, made 500 videos, made 20,000, $30,000 off that, but then just
0:23:38 burnt out. And so I think the best advice I can give anyone now is set manageable goals, you know,
0:23:44 do five videos a week, but do that consistently over a period of several months. And then it starts
0:23:49 to compound. And if you’re only making pennies in the beginning, just know it’s, it’s a numbers game.
0:23:54 And you know, it might not be my, my best product review. I did a review in my first year. I was about
0:24:00 six months in and I was starting to figure out what things sold better and what was trending. And I found
0:24:06 something that popped off and it made me $17,000. And I have not had that kind of success since them.
0:24:13 However, that product still makes me a few hundred dollars every single month. And if I had only done
0:24:17 my first 400 videos, I never would have had that product. And so it’s just being consistent,
0:24:23 looking for different things and improving over time, as far as your product selection and as well
0:24:26 as the style of the videos, things like that. You just get better at it.
0:24:31 17 grand from one video. You never know what’s going to pop off. Yeah. There was some effort in
0:24:35 creating that stuff, but create it once and it sits out there and can earn you passive income
0:24:43 for sometimes years. That was Tyler Christensen from episode 656. Now the Amazon influencer program
0:24:48 is still, uh, by application only, but it might afford an opportunity to, uh, double or even triple
0:24:55 dip on income. For example, after you’re established as a product reviewer, as, uh, as an Amazon influencer
0:25:00 brands start to send you product for free. They might even pay you to create the video. You’re like,
0:25:02 Hey, I don’t want your free product anymore. You’re going to have to pay me to do this.
0:25:07 And a lot of times they’ll say yes. And then you can earn your Amazon commissions on top of that.
0:25:12 And you might even resell the item when you’re done with it. Triple dip on this, uh, on this stuff.
0:25:18 So that’s the Amazon influencer program. Episode 656 was our update on that. Now I’ve got just a
0:25:25 fraction of the videos that Tyler, uh, has uploaded. I’m maybe 60 at this point, but still made over
0:25:32 $700 in passive income from those last year, stacking up those mini digital assets. Another popular
0:25:38 passive income idea under this category of building cash flowing assets is to create an online course
0:25:44 around an area of expertise. Now, like we talked about in our recent, uh, side hustle trends episode
0:25:50 with Spencer Haas, I think it’s becoming harder to sell a straight up a pre-recorded video course.
0:25:57 The trend seems to be shifting toward higher touch, uh, cohort based groups, personalized coaching,
0:26:01 community participation. And the good news is that those can command a higher price point.
0:26:06 The bad news is they’re less passive from the creator standpoint, but still I go back to
0:26:12 Jack Hopkins, the online course guy who has dialed in his piano in 21 days course marketing and sales
0:26:17 funnel over the last 10 years. So that it pretty much runs on autopilot.
0:26:22 There’s one opt-in on the website. Every page will point you to that opt-in and it’s an ebook,
0:26:28 a workbook called learn 36 popular songs in five days. That book I haven’t updated in a few years.
0:26:33 It offers a lot of value to people that are in my target market. Beginners looking to get quick wins
0:26:38 on the piano without sheet music and a lot of the traditional like music nerd stuff, like a lot of
0:26:43 theory and whatnot. So they download that. And then there’s about a 12 day evergreen funnel where they
0:26:51 get a lot of value through emails, through video and a, a limited time window to get a discount on the
0:26:55 program. So you can go to my website and buy the course at full price. I have two tiers. One’s $500,
0:27:01 one’s a thousand dollars, but inside that limited time window of the funnel, you can get in for basically
0:27:08 20% off. And those two packages go to $400 and $800. And that funnel has been exactly the same for many
0:27:15 years. One of the videos in there is me and my baby sitting on my lap, just super casual video, like less
0:27:17 than a year old. She’s about six and a half now.
0:27:22 Yeah. That’s where you really notice the passage of time. It’s like when you see your kids at these old
0:27:26 videos or old photos, you’re like, dang, that’s weird. Cause I haven’t aged at all.
0:27:32 When we recorded it, Jacques had sold over $4 million worth of his piano course, including lately
0:27:38 between 10 and $30,000 a month. That’s the power of building an asset that you can sell to multiple
0:27:43 people following a repeatable and scalable system. It’s actually really similar to a software business
0:27:48 where you sell access to a tool you created. Even if you’re not a coder, AI can help you build these
0:27:54 things now, which I think is really interesting. We had Pete McPherson on the show earlier this year
0:28:00 about how he used AI to create several different web apps. Now, a couple idea generating strategies
0:28:06 he shared were to scratch your own itch, create a tool to solve a problem in your own life or business,
0:28:12 or unbundling one feature of a more expensive tool, and then selling that as a standalone product.
0:28:17 Another one of my passive income streams is my portfolio of Kindle books, paperbacks,
0:28:25 and if you ignore launch periods, those have been earning between $200 and $500 a month
0:28:31 for years. And I’m actually starting to kick around some new book ideas this year after taking a few
0:28:37 years off. Obviously, a lot of effort to create, but can be really passive once the book is out there.
0:28:43 In nonfiction, it’s probably better off to consider your book as an authority builder,
0:28:50 the book as a business card mentality, and consider any royalty income as really just a bonus. For me,
0:28:55 it’s a top of the funnel. It’s a discovery point. If people are searching for side hustle information
0:29:02 on Amazon, I hope they find the books and enter into the ecosystem that way. But it’s, you know,
0:29:06 obviously, I’ll take the royalties too. Other self-publishing strategies that can tap into the
0:29:13 power of Amazon would be low-content books like journals or diaries or coloring books, maybe even
0:29:20 created with the help of AI. We had Aaron Kerr on the show years ago. He said he made like $100,000
0:29:27 from public domain publishing. His bestseller was this Anne of Green Gables compilation, if memory serves.
0:29:33 So lots of different ways to go about it and tap into the power of the pre-existing Amazon marketplace
0:29:39 in the example of Kindle books, paperbacks, audiobooks. Now, also under this category of building
0:29:45 cash-flowing assets, I would include websites or blogs, but the marketing, the SEO landscape has been
0:29:51 challenging lately, to say the least. If you can drive traffic from social media, from Pinterest, from email,
0:29:57 or even paid ads to a site monetized with advertising or affiliate partnerships, it can still be a viable
0:30:02 business and one where every piece of content can pay you over and over again. I mean, some articles
0:30:08 that I drafted years ago are still bringing in revenue every day, just not as much as they once
0:30:13 did. So that’s the second type of passive income and one we cover quite a bit on the show because
0:30:18 usually the startup costs are pretty low. It’s the sweat equity side hustle. The third type of passive
0:30:25 income is renting or selling access to assets that you own or control. And I’ll share some fun examples
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0:31:39 no missed customers. One strategy I didn’t fully embrace or maybe wasn’t fully aware of when I was
0:31:44 starting out was this idea of the piggyback principle. In the startup phase, that means you
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0:32:52 The third type of passive income is to rent or sell access to assets that you control. This could include
0:32:59 extra space around your house. It could be your backyard pool with a site like Swimply or even the
0:33:05 data generated by your phone through services like Caden. And we’ve seen several examples from side hustle
0:33:10 show guests renting out things that they own, sometimes with a surprising level of demand.
0:33:16 I went right into panic mode of, oh my gosh, I just bought this RV for a lot of money and my wife
0:33:19 doesn’t want to be here and jumped down to Craigslist and threw it up for rent.
0:33:25 Okay. So you’ve got this big expensive asset slash liability at the moment, but hopefully it turns
0:33:29 into an asset sitting in the driveway and said, well, shoot, what am I going to do with this thing?
0:33:36 So you turn around, put it up for rent on Craigslist. What kind of reaction does that get? Any takers?
0:33:41 Yeah. You know, it blew my mind. I literally had inquiries coming in within a couple of hours.
0:33:46 So the light bulb like immediately went off. People are, hey, I need it for this weekend because that
0:33:51 was in July when I purchased it for her. So it’s like in the middle of summer and people are like,
0:33:53 oh, hey, we’re going camping this weekend or that weekend, you know?
0:33:54 Sure.
0:33:55 So it was, it was wild.
0:34:01 That’s Gar Russell from Fireside RV who ended up buying a few more RVs to rent out before
0:34:07 transitioning to a lower overhead model of helping other people rent out their RVs and acting kind of
0:34:13 like a property manager slash booking agent. Yes, there’s work involved, but your income is tied
0:34:18 to the asset, not necessarily the hours you’re putting in. A similar strategy would be rental
0:34:23 arbitrage, leasing long-term and renting short-term with the landlord’s consent. Of course,
0:34:28 we’ve heard from guests like Richie Matthews doing this with apartment units and it was an
0:34:33 Ikea explosion was the line I remember from that episode. So you’ve got a little more upfront costs
0:34:39 in signing a lease and furnishing the place, but still relatively low risk if you’re confident in
0:34:44 your market research demand. And of course, a lot less investment than just buying a property outright.
0:34:48 But in several cases, we’ve seen entrepreneurs buying smaller assets for the sole purpose of
0:34:53 renting them out like Lenny Tim did with his mobility scooter rental service.
0:34:55 A brand new one is about
0:35:01 1500 bucks right now, a little less, a little more, but I actually bought mine used and
0:35:08 I look for about 500 bucks. I go on Facebook marketplace or any other local marketplace and I’m looking to get it for
0:35:15 about 500 bucks. So as you can, you know, see, I pretty much got my money back within one, two, three rentals.
0:35:22 Yeah. I’m thinking, yeah, if it’s 250 a week plus 75 delivery, like a couple of weeks later, I’m, I’m in the black on this, on this unit.
0:35:24 How many do you have at this point?
0:35:25 Right now I only have seven.
0:35:29 You say only. I mean, that’s a pretty serious fleet.
0:35:39 Yeah, it’s not bad. I have seven right now and I, you know, I make it work. I could definitely have a lot more, but I just, I keep it completely a side business.
0:35:49 The other interesting thing that Lenny did, and this is from episode 564, is he didn’t even buy that first one until he had a critical mass of inbound inquiries wanting to rent from him.
0:36:17 When I came up with the idea, it was back in 2019. My first thing was to just build a website just to see if there’s a demand. I want to see if there’s a demand for these scooter rentals. I didn’t go out to buy any equipment. I didn’t do anything like that. So that’s pretty much how I started just to build out a really nice website, just to see if I’m getting customers, if people are going to call, if people are going to make any requests before I actually go out and buy anything or commit to the business.
0:36:33 Did you do anything specifically on the SEO front to build backlinks, to build the Google business profile, to do anything other than just having like the exact, you know, what somebody might be searching for in the URL and then in the content on the site itself?
0:36:56 Well, first of all, the name, LA Mobility Scooter Rentals. I tried to get a domain that’s going to, you know, match, I guess, search pretty good. I didn’t really do anything special. I don’t know much about SEO. I just built a website. I did as much back-end SEO as I could. Whatever they asked me to fill out, I filled it all in. You know, mobility scooter rentals, mobility scooters, all that kind of stuff.
0:37:07 Put some good pictures, put up as much info as I could. I’m pretty sure I, you know, opened up a Google My Business page right away. And I may have did the Yelp as well at the same time, but that’s pretty much it.
0:37:12 Did you have a metric in mind? Well, if I get five requests a month, then I’m doing it or something like that?
0:37:21 Probably more than that, yeah. I definitely had something in mind where I would want to make decent money and it would probably have to be several requests a day.
0:37:33 During this time, Lenny would reply to customers and say, hey, sorry, we’re booked up at that time or we don’t have the inventory available. And then only after hitting that critical mass of inquiries did he go out and buy his first scooter.
0:37:40 He even did that in a pretty lean startup way as well, like we talked about finding one used on Facebook Marketplace.
0:37:51 Now, I’m a fan of these lower cost, unconventional rental assets. Like we did an episode about moving boxes, you know, renting out portable plastic boxes for moves.
0:37:55 We’ve done photo booths. We’ve done portable hot tubs. We did an episode about renting out dresses.
0:38:03 And here is actually Summer Fisher from that episode explaining why dresses are a unique asset class people probably don’t think about.
0:38:12 When you’re buying a dress, you’re buying cash flow, basically. So the dress, just like a house, the dress is the asset and I’m buying the cash flow from the rentals.
0:38:24 And so I’ve got to kind of make a mathematical decision. Is, you know, the money best sitting in the dress or is it best moving it on and buying something that’s kind of yielding a better rental?
0:38:27 She even gave a couple ideas on how you could get started for free.
0:38:33 If you want to get started, the two ways you can get started without putting a lot of money into inventory
0:38:41 is you can work on a consignment model. So you can go to all your friends and family and say, who’s got dresses? They want me to rent.
0:38:42 Oh, yeah. Yeah, yeah, yeah. I like it.
0:38:44 Yeah. You could get started that way.
0:38:56 The other way is, and this might be a bit controversial, but you can buy things on, say, if you’re in the US, you could buy things on somewhere like Revolve that have, you know, change of mind return policies.
0:39:16 And you could see it put it up for rent, see if it rents. If it doesn’t rent, you send it back. And before you have to pay your credit card. And then you can get a feel for what rents. And at least then if you have gotten that piece that rents, you’ve already recouped, you know, a third of your investment straight off the bat before you’ve actually had to pay any money out.
0:39:35 Again, that’s Summer Fisher from episode 652. Now, what if you don’t want to deal with physical assets, physical products at all? There’s another type of side hustle that I would lump into this rent or sell access to assets category. And that’s product licensing. Here’s Stephen Key from InventRight on why it makes such an interesting side hustle.
0:39:53 It doesn’t require any capital. You don’t have to set up a company. And there’s so many companies out there that need us creative people. So they’re looking for ideas. And every year, there’s just more and more opportunity for us to submit ideas to companies and let them pay us royalties for everyone they sell.
0:40:05 So that’s the basic business model is saying, hey, I am the idea guy who we just had on the show, and I’m going to turn around and essentially sell that intellectual property to some company who can turn that into a product and make money off it.
0:40:09 Absolutely. You’re basically renting your idea to a company.
0:40:09 Okay.
0:40:29 And they’re going to pay you on everyone they sell. So you don’t have to start a company. You don’t have to worry about manufacturing or raising money or do any of those things. And what’s really great about it, Nick, it’s really speed to market today, right? If you start a company, raise capital, all those type of things that you need to do to be successful, it takes a lot of time and effort.
0:40:39 When you license an idea, you find that perfect partner that has relationships, distribution, money, they can put your product on the shelf extremely, extremely quick.
0:40:56 Steven went on to explain that 5% of gross sales is a pretty typical product licensing agreement, which may not seem like a lot. But if you think about the distribution and economies of scale that some of these larger brands have, it can really add up, especially for something with super low startup costs.
0:41:01 I mean, you’re basically taking something for free from your brain and getting paid for it.
0:41:04 And Steven had some great tips on how to approach companies with your ideas.
0:41:09 But one thing that was surprising to me is a lot of companies already have a process for this.
0:41:16 They’re really open to crowdsourcing product ideas from people like you and me and paying us for them.
0:41:25 For example, if you look up Hasbro submit ideas, you’re going to find a structured program called Hasbro Spark that lays it out, how it all works, how to submit your proposal.
0:41:31 So be sure to check out that full episode with Steven for more on how product licensing works.
0:41:32 I’ll link that up in the show notes.
0:41:37 And I also want to add that product ideas aren’t the only thing that you can license.
0:41:38 We’ve seen examples.
0:41:40 You can license photography.
0:41:42 You can license voiceover work.
0:41:43 You could license music.
0:41:46 I think we’ve got examples of just about all of those in the archives.
0:41:52 So for that third category of passive income, think unconventional rentals.
0:42:03 Think creative assets that people might want to use occasionally, but maybe can’t justify buying themselves or they don’t have a place to store themselves or licensing your work or your ideas.
0:42:09 Again, trying to figure out ways to get paid multiple times from work you do once or something that you buy once.
0:42:10 And maybe you may not even have to buy it.
0:42:14 Like in Gar’s example of the RV, I’m renting out other people’s RVs.
0:42:20 Or maybe you could work out a consignment sort of deal with somebody else and act as a property manager for that asset.
0:42:25 Like Summer mentioned, you know, maybe I could consign other people’s dresses and do rentals for those.
0:42:30 The fourth type of passive income is what I call reverse passive income.
0:42:34 Reverse passive income comes from cutting your ongoing monthly expenses.
0:42:36 This is Ben Franklin.
0:42:37 A penny saved is a penny earned, right?
0:42:41 And it’s actually better than that because, well, your earned income is going to be taxed.
0:42:46 So simply spending less money might be the fastest path to improving your bottom line.
0:42:52 And the truth is, it’s a lot more fun when you view it, when you view saving money as a game instead of a necessity.
0:43:01 One way I try and do this is through what I call the substitution game, which aims to find better, faster, cheaper alternatives to what I’m already spending money on.
0:43:05 What that looks like in practice is taking stock of your monthly spending.
0:43:06 Easy way to do it.
0:43:12 Just bring up your bank statement or credit card statement and look at each transaction and ask, is there a better alternative here?
0:43:18 And you might find some room to completely eliminate or cancel certain expenses or subscriptions.
0:43:22 But I find the substitution game doesn’t even have to feel as drastic.
0:43:28 Classic example was switching from Verizon to Ting to Mint Mobile for cell phone service.
0:43:32 Over the years, that’s added thousands of dollars in reverse passive income to our bottom line.
0:43:37 It could be renegotiating your TV or internet service to get a better deal.
0:43:41 It could be shopping around for a better car insurance rate.
0:43:43 It could be dropping that annual fee credit card.
0:43:52 One huge one for us that a lot of people don’t consider was actually a big substitution Joshua Sheets mentioned on the show probably 10 years ago.
0:43:57 And that was moving to a lower cost of living area or a lower tax area.
0:44:07 Now, the Seattle area, definitely not a low cost of living area, but it had one big advantage over California, where we used to live, in that it’s a no income tax state.
0:44:09 Washington state, no income tax.
0:44:17 If you’ve got a portable skill, if you’re location independent, if you’re a remote worker, this is one of the biggest levers you can pull.
0:44:21 But it’s obviously pretty uprooting to pull off, so not for everyone.
0:44:27 On a smaller scale, one thing you might consider is a house hacking arrangement to offset some of your living expenses.
0:44:32 This is where you buy or rent more space than you need, and you rent out a portion of it.
0:44:37 On the business side, the substitution game is called Operation Tool Swap.
0:44:44 This is where you look at your tech stack or your monthly software expenses, and you see if there are alternatives that would accomplish the same thing.
0:44:52 Steve Chu and I talked about Zapier earlier this year, when they went out and doubled their pricing, we switched to Make.com.
0:44:55 Same functionality, fraction of the price.
0:44:57 AppSumo is a great resource for finding deals.
0:45:03 You might even pause services that you don’t use every month or have some duplicated functionality.
0:45:13 Like we were able to pause Otter, which was an AI transcription service that we used really consistently, because it turns out that same functionality is already built into Descript.
0:45:21 I created the RoboNIC AI voice clone in 11 labs, but I don’t use them every month, so we just toggle that subscription on and off as needed.
0:45:30 Even Ahrefs introduced a lower tier price plan that was still more credits than we needed, so we were able to drop down to that without any impact to the business and save some money every month.
0:45:39 Now for personal, what I might call luxury or non-essential expenses, I try to apply a 30-day waiting period, call it a cooling off period.
0:45:45 How it works is if there’s something you want to buy, just put a note in your calendar to ping yourself in 30 days.
0:45:48 And if you find you still want it, go for it.
0:45:57 But oftentimes, you’ll find you lived a perfectly happy existence in the meantime, as it just makes you reevaluate how important it really is and might save you some money along the way.
0:46:05 In our episode on creative ways to save money, Jen Smith gave us her four-question framework to use before any purchase.
0:46:07 Before I buy anything, I use these four questions.
0:46:09 How can I get it for free?
0:46:15 So like a buy nothing group or free on Facebook Marketplace or from a friend either trading or borrowing.
0:46:19 If I can’t get it for free, how can I get it for low cost?
0:46:21 And so that’s where secondhand comes in.
0:46:25 How can I get it on Poshmark, eBay, ThredUp?
0:46:29 Can I buy it from Facebook Marketplace, Thrift Store?
0:46:39 Or if I can’t get that, and I don’t spend a ton of time searching for these, I’m, you know, depending on how fast I need something, I’m not searching for years, right?
0:46:40 Right.
0:46:45 I’m just, I’m looking, I’m trying to get creative before I just first go out and buy it new.
0:46:50 If I can’t get it low cost, I ask, how can I get a deal on it?
0:46:53 Like, how soon is the next sales cycle coming up?
0:46:55 Because they always come back around.
0:47:02 And then if I really need it and I can’t wait for a sale, how can I buy full price and not feel guilty about it?
0:47:06 So is there a way I can buy locally or sustainably?
0:47:08 Something like that.
0:47:13 So those are the four questions that I ask before I buy something in order to save money.
0:47:17 Now, ahead of any big purchase, I try and do a few things.
0:47:19 Obviously, shop around, try and get the best price.
0:47:23 Maybe even try and negotiating if you feel like that’s a thing that is an option.
0:47:27 Maybe add it to your cart from a couple different stores and then let it sit a few days.
0:47:34 A lot of online stores have some kind of abandoned cart email offer where they may send you a special discount to complete your purchase.
0:47:41 You’ll also want to check a site like Cashback Monitor to see how you might maximize your cash back on the order.
0:47:48 Basically, there are a bunch of affiliate sites that split their commission with you when you buy through their links at no extra cost.
0:47:49 So it’s like getting free money.
0:47:55 Rakuten is the one that I’ve used most consistently and have saved hundreds of dollars at this point.
0:47:58 Another thing you can do is check for card linked offers.
0:48:10 For example, you can look in your Chase or Bank of America or Capital One portal and you’ll often find an extra 5% to 10%, 15% back on stuff you might be buying already.
0:48:15 You just have to check the box and sometimes you got to buy through their link or sometimes you got to add that offer to your card.
0:48:18 Typically, only check for bigger purchases.
0:48:24 And these are usually listed in Cashback Monitor as well as a way to check multiple different portals at once.
0:48:27 Another thing you can do is buy discount gift cards.
0:48:29 Costco can be a good source for these.
0:48:36 I actually used to buy big discount Costco gift cards at like 5% to 10% off through some discount gift card site.
0:48:40 Just a little bit, a little ways to save money on what you’re already spending.
0:48:47 And then once or twice a year, if I know we have some expenses coming up, I’ll look at new credit card sign-up offers, sign-up bonuses.
0:48:51 These usually range from $200 to $1,000 in value.
0:48:54 For spending money, we were going to be spending anyway.
0:49:00 So it’s a way to mentally offset the cost of the new thing, like an appliance purchase or plane tickets for the family.
0:49:04 We also did an episode recently on bank bonuses.
0:49:09 Not entirely passive because you got to set up a direct deposit and meet some other minimum requirements.
0:49:18 But my guest, Dylan, said it was easily a $200 to $300 an hour side hustle that he was able to do consistently with one new account a week.
0:49:26 And I’d seen those offers before, but always thought, oh, it’s too big of a hurdle to switch over my entire banking life for a few hundred dollar bonus.
0:49:28 He said, Nick, you’re looking at it all wrong.
0:49:30 You don’t have to switch over your primary account.
0:49:32 You just have to meet these few requirements.
0:49:37 Check the boxes, collect the bonus, lather, rinse, repeat on the next one.
0:49:39 And all of a sudden, it looks a lot more attainable.
0:49:43 So that is episode 663, if you want to check that one out.
0:49:45 But that’s reverse passive income.
0:49:47 Perhaps the easiest of the four to start with.
0:49:49 Get some quick wins under your belt.
0:49:51 Improve your bottom line by saving money.
0:49:52 Getting some easy cash back.
0:49:56 So to recap the four types of passive income in this episode.
0:49:59 Number one was to buy cash flowing assets.
0:50:00 We talked about real estate.
0:50:02 We talked about vending machines.
0:50:03 We talked about small businesses.
0:50:05 We talked about dividend investing.
0:50:07 Lots of different ways to go about that.
0:50:10 Number two was to build cash flowing assets.
0:50:13 Remember, this is the true side hustle, sweat equity option.
0:50:17 Digital products, printables, courses, e-books, websites.
0:50:19 Anything under that umbrella.
0:50:24 Number three was to rent or sell access to assets that you control.
0:50:31 RVs, cars through two-row space in your backyard shed through a neighbor.com.
0:50:32 Could be Airbnb.
0:50:37 Could be renting out mobility scooters, photo booths, dresses, portable hot tubs, moving boxes.
0:50:41 We’ve got lots of fun examples on this kind of rental business.
0:50:45 Like this semi-passive asset where you can get paid over and over again from something that
0:50:50 you bought once or maybe even you don’t own in the example of Gar’s RV rental service.
0:50:55 And the fourth type of passive income is that reverse passive income where you can cut recurring
0:50:55 expenses.
0:51:01 You can play the substitution game, maximize your cash back, strategically work out credit card
0:51:08 bonuses or bank bonuses into your year, and maybe even consider a 30-day no-spend challenge
0:51:11 or, you know, 30-day waiting period before any big purchase.
0:51:16 But my recommendation is to start with a small passive income goal.
0:51:22 Something that is small enough to be attainable, but big enough that it’s still interesting and
0:51:23 meaningful to you.
0:51:24 That’s a sweet spot.
0:51:27 For me, it was $1,000 a month.
0:51:30 And there was a specific project I was hoping would get me there.
0:51:35 That was my virtual assistant website back in 2011, 2012, 2013.
0:51:37 And eventually it did.
0:51:39 And so that was really rewarding.
0:51:41 That was like, I’m going to build up this passive income stream.
0:51:47 But hopefully this episode has sparked some ideas on the many, many different ways side hustlers
0:51:49 have started to build their passive income.
0:51:54 Building passive income streams that aren’t directly tied to your time is such a crucial step
0:51:59 in building financial independence, even if they start out super small.
0:52:05 I remember a line from Mike Newton 10 plus years ago on the show about, he said,
0:52:12 I’m more excited about earning $5 passively than $5,000 actively because that $5 didn’t
0:52:13 trade time for it, right?
0:52:15 It had the power to scale.
0:52:21 Really empowering and encourage you to carve out a portion of your week dedicated to pursuing
0:52:22 time leveraged income.
0:52:23 Nobody’s going to do it for you.
0:52:25 It’s not going to happen by accident.
0:52:26 You got to take control.
0:52:28 You got to be proactive about it and do that.
0:52:32 Big thanks to all our guests for sharing their passive income advice over the years.
0:52:35 Thanks to our sponsors for helping make this content free for everyone.
0:52:40 Be sure to check out sidehustlenation.com slash deals for all the latest offers from our
0:52:41 sponsors in one place.
0:52:43 That is it for me.
0:52:45 Thank you so much for tuning in.
0:52:49 If you’re finding value in the show, the greatest compliment is to share it with a friend.
0:52:53 So fire off that text message, let them know and say, hey, what kind of passive
0:52:56 income would you like to add to your life?
0:53:00 Until next time, let’s go out there and make something happen and I’ll catch you in the
0:53:02 next edition of the Side Hustle Show.