Passive Income
By Mike Hillyer | Related entries in IncomeWell these days this site actually earns enough for a cup of Starbucks a day (that Jeremy and I have to share), and it looks like blogging can even earn you six figures a year, but lately I have been thinking about generating some passive income.
Any money I earn from blogging is active income: If I don’t kill spam comments and post regularly (sorry for the drought lately folks), then eventually the well will dry up. There is nothing wrong with active income, but if you want to make six figures of income per year you have to give six figures of effort.
Passive income, on the other hand, is defined as follows:
An income stream falling into this category, is one where money is received usually on a regular basis, where no additional effort has taken place. This doesn’t mean no effort at all. Most passive income streams require great effort to start with.
Source: http://en.wikipedia.org/wiki/Passive_income
Wikipedia does not lump portfolio income into this category, though you can certainly earn a fair amount of income passively through the markets.
So, how do we get passive income? Well, one option is through property ownership. As a former resident manager of an apartment building, I know that such income can be less passive than you would think: I was constantly dealing with irate tenants, stoners, bounced rent cheques, noise problems, trashed apartments (more than the damage deposit covered), and tenant laws that often protect the bad tenants more than the landlords. The initial outlay can be pretty high as well.
Buying and leasing out the right piece of land may be a step up from this, but once something is built on the land you better hope the next tenant needs the same kind of building, or you may have a vacant lot to deal with (vacancies are a big issue for conventional landlords as well).
Too bad I missed the .com boom, where a bright idea and the right .com domain could make you millions. Of course, it may be enough to have a bright idea and the right domain name today and make thousands.
To that end I have registered my share of domain names, and I make a few dollars here and there. The challenge going into it is finding the time for that great effort needed at the start to get a profitable web site up and running. There are templates to design, code to write, and awareness to build.
If you can make it work there is good income to be made, but still a fair amount of work involved. It may not be as passive as renting out land, but at least it beats most jobs.
This entry was posted on Monday, August 15th, 2005 and is filed under Income. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
August 16th, 2005 at 6:25 am
Mike,
I know how you feel - the income I get from AdSense is minimal at the moment, it’s quite a nice feeling seeing it gradually build up, although if I properly analysed the time & effort I’ve put in so far then I might find that I could have spent my time better doing something else, as you point out, Adsense income for most of us is “active” income.
I too have registered a few domain names with the intention of building them into something big, but so far have lacked the motivation to really develop them.
Rob.
August 17th, 2005 at 7:47 pm
Mike,
What is your advise for starting a profitable website? Sorta “Starting a website/on-line business 101″?
The questions bother me most at this time is,
- Which is better, hosting from a m/c in my bedroom with Comcast like Internet connection? or hosting it at some provider like yahoo?
- What other generic things one should keep in mind…like bandwidth requirements, where I can save a dollar or two, etc.
-Aakash
August 19th, 2005 at 9:21 am
Blog sells for $2,000
A blogger auctions his blog for $2,000. What would bigger blogs fetch?
August 20th, 2005 at 11:54 am
Buy my blog?
It seems blogs are the new real estate now. Problogger reports that personal finance blog Wealthy Blogger was just sold for $2000! See the actual action post here. Dude. I actually never really visit Wealthy Blogger myself, solely because somehow the s…
August 20th, 2005 at 3:27 pm
Congrats!! That’s awesome!
August 20th, 2005 at 9:21 pm
Aakash: I personally host some web sites from my home machine on cable, and some from a hosted dedicated server. Provider hosting gives you less control of the software on your server, and depending on your geek level that is either a good thing or a bad thing.
Of course, hosting at home means your site (and revenue) is at the mercy of comcast, power outages, hardware failures, etc. Hosted sites can be more reliable and if something goes wrong, it is the ISP’s problem.
Bandwidth requirements depend on the popularity of your site, and if the site is making money then you can afford the increased bandwidth.
If you are not comfortable managing a server or have spotty power/connectivity, you may want to get hosted.
August 22nd, 2005 at 12:55 pm
Nice blog you have here.
August 23rd, 2005 at 7:35 am
Did somebody buy this site from you? I heard a rumor somewhere.
August 23rd, 2005 at 8:00 am
See the latest post Indiana.
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November 19th, 2005 at 8:09 pm
creating a website over time can become passive income…a little harder for a blog. The key is creating a site that is self sustaining and doesn’t require you to update it constantly.
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