top of page
  • Writer's pictureNathaniel Mellor

Understanding And Creating Passive Income

Now that you know why it's important, the question is "how to make it happen?"


This article might make use of affiliate links. By clicking an affiliate link and purchasing the product or service it links you to, you are supporting this website with a small cut of said company's profit. We appreciate your support.


Right off the bat, I will say that everyone has their own way of creating passive income. Everyone starts with a different financial starting point, a different passion or interest, and usually a different financial goal (though it's generally to make money). And, as you're well aware, the old adage is true: it takes money to make money. Realistically, you're going to make far more money by renting out a house that you own outright than you will from starting something from scratch.

A photo of someone holding a smartphone with a Robinhood investing screenshot.
A timeless form of passive income: losing everything.

However, there are still some guidelines on how to create passive income.

On a whole, passive income is boiled down to three categories. In the previous article, I used Investopedia's definition, however, in this article I want to simplify it even further.

  1. Renting something you own

  2. Selling rights to what you own

  3. Investing

In my experience, a mix of all three is the best way to make money (in theory) but they each require a different set of skills, time investment, and financial investment.

Renting Out Something You Own

I think this is what most people think of when they think "passive income." Buying up a bunch of properties and becoming a slumlord—errr, landlord.

I should probably warn you all now, unlike some blogs and websites that try to present each option as "completely valid," as someone who has suffered through a number of apartments owned by single individuals or businesses and who refuse to fix anything until I leave, I will not have the same lack of bias. Morally, you should be traveling the world's on the back of human suffering that you created.

Renting what you own can look like many things, especially these days. If you are taking an extended trip, rather than moving abroad permanently, you might not want to lose money that you don't have to. After all, mortgages and rent will still have to be paid, as will car payments and car insurance, and any other land/house/vehicle related fees. For many people, this can make taking a trip far more expensive than just what they're paying to travel, they're also paying not to use their house and car.

So what's the alternative?

Home Rental

Believe it or not, despite what I said earlier, I do agree with homeowners renting out their house when they leave. After all, if something does break, you'll also likely want it fixed, not just the interim tenants.

Renting out your house can take many forms.

  1. Subletting. Probably the easiest option available. Offering your house for rent for the same (or similar) cost of your rent or mortgage. This way, you break even and don't lose money.

  2. AirBnb/VRBO/Etc. Right off the bat, I will warn you that this might be the nightmare option. Many neighborhoods and cities do not allow short term rentals or vacation rentals. Plus, if you aren't there to let the lodgers in, you might need to hire someone to help out, especially when it comes to cleaning the house and sheets. However, if you do want to dip your toes into these waters, you can make a decent profit if you live in a desirable city.

  3. Giggster. Renting out your house has come a long way in recent years. Now you can rent out your house for movies/photoshoots/what have you. While Giggster is only available in a handful of large cities, there are other ways online to find people looking for filming locations.

  4. Storage. This one is a bit of a long shot, but I have had friends that tried this with some success. If you're leaving for an extended period, you can try to rent out your home/apartment/garage/etc. as a storage unit for anyone you know looking to stash their belongings somewhere for a short period.

Land Rental

Not everyone has a little plot of land out in the country they're not planning on using. However, if you have a backyard, garage, or carport that might be a bigger source of income than you realize.

  1. Car Parking. Where I live when I'm Stateside, in Savannah, GA, there are laws around cars being parked for too long on the street and some neighborhoods even have laws on how long a car can be on a driveway if it doesn't have wheels and/or an active license plate (ie. no fixing up cars in the neighborhood). On a handful of occasions in the past few years, I have had friends put their car in my "garage" (a shed with plywood doors) or high up on the driveway, when I had one. However, the City of Savannah doesn't care how long you park a car in your backyard, with or without wheels and plates. So if you have some backyard space, and you aren't going to be using it, consider renting it out to someone looking to park their car somewhere for an extended period.

  2. Van/Camper Parking. Savannah is also home to a fair number of van-and-converted-bus dwellers. For a town that's fairly harsh on long-term camper parking, it's honestly mind-blowing we have any. Apart from the Costco 40 minutes away, there aren't many places to park a camper, oversized van, or bus. Not to mention, Savannah in particular is a big "drinking town," one of two that allow people to drink while walking around the Historic District. (Now that we live in Europe, where one can drink and walk anywhere, this is really crazy to see how uncommon it is in the States.) This means that people do tend to drink and walk back to their car and fall asleep in it. If you aren't aware, you can still be charged with a DUI if you're on a public street, even if the keys aren't in the ignition, and you're sleeping. As you can imagine, this is far more difficult for van/camper dwellers. If you buy a few beers from a grocery store, you can't have them in your parked camper if it's on public street. This creates a need for people to park their campers and vans on private property—your property. If you have an external outlet and spigot for water, all the better! Websites like JustPark and HomeCamper will make finding people easier (or a message board at your local café).

  3. Garden Rental. You can probably start to tell by this point that I come from a fairly particular city. Through websites like YardYum and SharedEarth, you can rent out your yard as garden space. Just be sure to double-check that you're allowed to plant non-grasses in your front lawn, if that's the only place available. Many neighborhoods in America do not allow for a certain percentage of the front lawn to be "garden." If you try this option, it can be a great way to make money while also giving back to the community.

  4. Car Rental. This isn't just for Hertz or Budget, you too can rent our your car (or bike!) if you aren't using it. Many companies like Turo or Getaround offer their own insurance plans so there's little to no fear of finding a damaged car once you return sun-kissed and relaxed from your trip. If you have a bike (or bikes), you can rent them through websites like Spinlister. You can also try your luck renting to (trustworthy) friends and family! In the same vein, if you own a camper van or mobile home, you can rent those through websites like RVShare and RVnGo.

Selling Rights To What You Own

In another post, I discuss the types of jobs one could have while being a digital nomad. And, of course, one of them is "photographer." This is a great example of someone being able to to sell the rights to what they own. Once you take a photo, you can put it up for use on sites like Shutterstock and sell one-time rights to website builders like myself.

If you design website templates for websites like Wix or Wordpress, you can also sell them/rights to them. Unlike many passive income methods, this is one that has a lot of initial development time and continuous "upkeep" time as you keep the template up-to-date.

For others, this can be collecting royalty checks from music, photo, video, and website rights (depending on the contract).

While it's a completely valid way to create passive income, it's far more niche (in my opinion), and harder to execute successfully.

To go beyond selling "rights" there is also the possibility to sell "access" to soemthing you own. And here is where many fledgling passive income enthusiasts thrive. You can create and sell access to courses whether it's on Udemy or YouTube (you can't charge people to see a video on YouTube but you can make the video "private" and only share the link with people who pay), amass and share information in the form of a newsletter, podcast, blog, or YouTube channel, write and sell ebooks (I have many thoughts on this one), and pretty much anything else you can think of.

This is what people usually mean when they talk about "passive income" because so many of us cannot rent out our homes (we don't have one) or invest in a company (no money).

In another post, I offer some idea about ways to make passive income along these lines, but I urge you to also look beyond these posts, and other people's posts. I also urge you to take everything you read with a grain of salt. Just like the concept of "side hustle", passive income is often misconstrued. I once read a blog post where someone said "starting a recycling company" is a great form of passive income. I consider that to just be business income. And while the difference might be negligible, none of my suggestions will be "start a business" or "learn to write award-winning novels, it's super easy".


In the post about digital nomad jobs, I briefly mention day trading/investing in the stock market/crypto market, and I also mention that I don't think it's a great idea if you're not sure what you're doing. To be honest, I'm not entirely sure it's a great idea if you do know what you're doing. Making the wrong investment and losing money is never a great idea, but it's an even worse idea when you're abroad, "self-employed", and without a safety net.

However, I have come to learnt here are other forms of investments.

A friend of mine in Italy is originally from Ghana, having moved here eight or nine years ago. Because he wasn't paid very much at his day job (at the time), he decided to invest in calves back home in Ghana. He originally bought one for $300USD and every year, when the calf grew, it would be worth more money (minus the fees of paying the farmer to take care of it and feed it), until it was fully grown and ready to be sold into the meat market. While the idea isn't that appealing to me, as a vegetarian, I liked the idea of a decentralized farm. Sort of like paying a monthly fee to a farm and receiving dividends when the crops are sold.

Likewise, if you're feeling adventurous, Somalian pirate companies can be invested in through their "stock market" in Haradheere. While I disagree with investing in piracy, I'd be lying if I said investing in some American companies was any less cutthroat.

While investing in the traditional way (invest in a company or stock long term and live off dividends) is still valid, it requires a lot more capital than other methods, such as buying and renting houses.


Related Posts

See All
bottom of page