Not so long ago, starting a passive income YouTube channel was all the rage. It would go something like this:
An intrepid entrepreneur searches for a YouTube topic in high demand. Said entrepreneur then creates evergreen content around that topic. The entrepreneur then uses SEO to optimize those videos so they would (ideally) rank well in search results. Monetization would follow via YouTube ads and affiliate links, and the entrepreneur would watch their bank account balance grow.
That worked — until it didn’t.
With over 114 million YouTube channels now available, getting found on the platform is more difficult than ever. For many, the time and effort required to produce, edit, and promote videos hardly makes YouTube a passive income stream anymore.
So, what other passive business income ideas are still worth pursuing? Here are four options that offer much better opportunities today.
1. Buy a franchise
There are two types of franchises. One is “owner operated” — this is where the owner operates the franchise. The other is “manager operated.” Here, the business is seen as a passive income opportunity.
Yes, franchises typically require a significant upfront investment, but the financial rewards can be substantial. What is great about franchising as a passive business is that the whole point of the franchise is that the franchisor created a successful business model that can be duplicated.
It is designed to allow anyone to recreate their success. That makes it a fantastic passive income business because you personally do not have to run it for it to be successful.
2. Buy rental property
Real estate has long been a favorite method for generating passive income. And there are all sorts of different rental property types that you could invest in as a passive business.
Residential
The strategy is simple: Buy a home, duplex, or apartment complex, rent it out to tenants, and let the rental income cover your mortgage and other expenses while you pocket the difference. Income is generated in two ways.
First, there is the rental income from the tenants. Second, over time, the property should appreciate, and that will eventually create income. To make this opportunity more passive, you’ll want to hire a property manager to oversee things — otherwise, you’ll be collecting rent and addressing maintenance issues yourself.
Commercial
Investing in strip malls, office buildings, and the like is a tried-and-true passive business play. As those buildings are run by property managers, they’re a very hands-off opportunity for the entrepreneur.
Vacation
By renting out a second home or even a spare room in your primary residence, you can capitalize on the growing demand for short-term stays. Websites like Airbnb and Vrbo make it easy to find travelers, and vacation rentals tend to bring in higher rates than long-term leases.
But there are risks, such as dealing with noisy guests, property damage, or the city or neighborhood banning short-term rentals, which is happening more frequently.
3. Start a vending machine business
Yes, vending machines may seem like an old-school business model, but that’s OK. Old school means they’ve been around a long time, and being around a long time means that the business model works. More proof: The United States has more vending machines than any other country in the world.
You would begin by finding, purchasing, and placing machines in high-traffic locations like schools, gyms, or office buildings. No, that is not passive, but thereafter, it sure can be. Once operational, the maintenance and restocking of the machines can be outsourced, providing steady cash flow with limited ongoing involvement.
4. License your content
Personally, this is the option I have used the most, as I have been a content creator for many years. Take it from me — getting royalty checks for work you created years ago can’t be beat as a passive business model.
If you’re a photographer, videographer, musician, or creator of other digital content, you could license your work to generate passive income. Platforms like Alamy and Adobe Stock allow photographers to sell images, while musicians can upload their tracks to sites like AudioJungle.net. In my case, I’ve licensed my small business content (articles, e-books, blogs, podcasts, etc.) to a variety of corporations over the years.
So yes, creating a passive income business is really quite doable. And if you do it, you will likely be very glad you did.
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It’s Too Late to Start This Passive Income Business, but There’s Still Time for These 4 Options was originally published by The Motley Fool
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