Ask HN: Your best passive income sources? | Hacker News Reader

Ask HN: Your best passive income sources?

85 pointsbuf33 comments

Previous post 1 year ago: https://news.ycombinator.com/item?id=4639271

Depending on what you consider passive...

My "best" passive income source would be subscription revenue from SaaS businesses. I run several, with no employees, with growth from existing marketing and word-of-mouth outpacing churn, and no active management needed other than answering customer e-mails. Everything that can be automated is automated, from backups, to monitoring, to lifecycle and dunning e-mails. Improvely (https://www.improvely.com) is the newest, just over a year old now, and passed $10k/mo RR not too long ago.

If that's still too much to qualify as passive, the stock market contributes the next largest chunk of revenue. Of the money I put in equities, 2/3rds are in index funds (primarily total market stock and bond indexes), and 1/3rd in hand-picked tech companies. The market's been good since the recession crash; better than a 25% annual return.

My most passive income is from revenue sharing affiliate/referral agreements. I work with a lot of small businesses with websites, and refer them to vendors for merchant accounts and advertising services as both publishers and advertisers. For all three, I found good companies to work with that pay a percentage of referrals' spending for the life of their accounts. There are businesses I referred for credit card processing almost 8 years ago I'm still getting a monthly commission check of several hundred dollars a month for, each.

I just skimmed through the Improvely website; it looks great. I'd never guess that there was a single passive developer behind it. Can I ask what your investment was in building it?

Nice. I'll also echo what DougWebb said, Improvely is a great looking site.

Drop shipping eCommerces sites. I've been doing this for 5+ years full-time. Starting out - like anything - you need to do a lot of the legwork yourself but now I only spend a few hours a week managing my team and it provides a healthy full time income. And with drop shipping, all the fulfillment, purchasing and warehousing is handled by someone else.

I know drop shipping can get a bad reputation, but when done correctly it can be an effective way to create a passive income streams. If you can program well, I'm not sure if I'd recommend it over a SAAS based approach. You'll likely be able to make more money with SAAS as you're creating your own products vs. selling an existing one. But the long-term upkeep is generally less for eCommerce vs. SAAS (guessing here, as I've never run a SAAS business).

Margins are a bit lower with DS, so it does take a while to build some organic traffic and marketing buzz. But once that starts to gain some traction, it's not too much work to get a team in place and automate things. And if you're willing to put in the time to make a high-quality site that addresses customer questions and buying hesitations up-front before the sale, it's even easier to automate on the back end for support.

But you do have to be careful about niche selection. Because drop shipping markets are fairly competitive (low barriers to entry), you have to be really selective about what nniches you get into. Specifically, I like to see really confusing niches where I can add lots of informational value, plus lots of accessories I can sell to increase overall margins). For anyone who is interested, I wrote a blog post on the three crucial things I look for when picking a niche for eCommerce and drop shipping:

http://www.ecommercefuel.com/anatomy-of-profitable-niche/

Residential real estate investments, mostly in San Diego, CA. I bought during the dip '08 to '12 and rent them out. Property managers take care of all of them for me. Most are condos, which are significantly better for cash flow than single family homes.

I got pretty lucky with them. One one I distinctly remember I bought for less than half of what the people losing it (short sale) still owed. They were all in pretty good condition, I just replaced the carpet, painted, made minor repairs, and replaced appliances.

Social welfare sponsored by the tax payer.

I enjoy having side projects and currently have 4 active ones that could realistically make at least a some money. But as a foreigner in the US (came as student, now on H1B visa) it's the unfortunate reality that it is illegal for me to pursue money-generating side projects. I am curious to hear if other foreigners have found ways to legally pursue their side projects while living in the US.

I have absolutely no idea how this works, but can't you just put it through a bank account/company you set up in your home country and pay tax on it there?

fixed income. muni CEFs are trading at a 10% discount to NAV. overall fixed income is under pressure due to fear of rising interest rates and fed tapering, so future interest rate hikes are partially priced in both in NAV terms and in discount. if you don't have any plans on selling your bonds (and hence, don't really care about the day-to-day price fluctuations of bond funds) and just want an income stream you could do worse than loading up on discounted, diversified CEFs that pass the smell test of being able to sustain their distribution.

the main risk here is inflation risk. if inflation in the country takes off your 5% yielding (likely 30% leveraged) bond fund is going to start to see its real return get eaten away quickly.

the alternatives are equities though. and right now the stock market is pretty scary to me.

I'm no bond expert, but aren't munis discounted in part due to default worries? There's a fear that a second wave of municipalities that survived the first wave of post-crisis bankruptcies may still succumb, since many avoided default by doing miscellaneous stop-gap and accounting tricks that may not be repeatable. Hence a risk premium.

Yes this is likely part of the reason but in general the discount arose due to the fed tapering issue since the discounts on all fixed income have widened together since. Regardless, a particular muni fund will be exposed to thousands of municipalities, so default risk is essentially diversified away, particularly if you invest in a managed fund where the fund managers have a track record of understanding the municipalities they invest in. Unless you are a devout believer in the efficient market, one could argue that the discount could in part be due to irrational investors selling their munis to buy equities in a media environment where scary headlines about Detroit going bankrupt are on CNN and Facebook stock doubles since it's IPO.

Those factors can account for a decrease in the asset price, but not for a 10% discount to the going asset price by buying through a closed end fund.

I sell bitcoin on localbitcoins.com with a 5% profit margin. I wrote a set of scripts that automates the entire process for me, making it completely hands off. I've only been doing this for a month or two, but I've made a decent amount.

Not completely passive but I run http://wappalyzer.com which is very low maintenance and a decent secondary source of income.

Server hosting. $50/u. Bring your own 1u box. The datacenter I'm affiliated with handles any hot-hands stuff. It's 99% passive for me.

Affiliate commission checks from services who pay recurring commissions for referrals. These are truly passive - about $100/mo

What is your website? Who did you get started?

After making nearly $0 per month for the first year (yes, you read that correctly), http://www.pingmate.com now generates excellent RR, though the first year was far from passive.

Two Android apps I made on weekends. $50/mo ad revenue with just admob.

Single family rentals (SFRs) which cash flow. I put 20%+ down on properties in solid locations (strong population/job growth, safe neighborhood, etc.). I save about 80%+ of my after-tax income.

Doing a web business "on the site" is definitely very hard. However, you could invest money into highly tech startups, so that it balances your "old money" ;-)

I second the Single family rentals (SFRs). Follow the 12% rule which is that the house HAS to rent on an annual basis for at least 12% of purchase price. For example a $100K house has to rent for at least $12K per year ($1000/month). So put 20% down ($20K), get a 30 year fixed for $80K. Your expenses on monthly basis are mortgage + prop tax + prop manager + prop insurance = $500-$600. Rental income = $1000 per month. So you clear $400-$500 per month ($4800-6000/year) per rental property. With 20% down ($20K), that's a ROI of right around 20% before any property appreciation. Note: I didn't include closing costs which fluctuate a fair bit depending on lender and where the property is.

Games. I release one browser game (kinda like Travian or eRepublik, but simpler) pretty much every other month and they are actually a very good source of income. They pay all of my bills.

Bitcoin mining.

Is that still working? With with hardware?

Ten friends bought in with me on a bunch of BFL hardware way back in the day, so we were fortunate enough to be ahead of the curve. It is quickly becoming less profitable though.

Do you actually do this and make a profit overall?

CodeCanyon. Not very much, but that's cool to get 100$ each 2-3 months.

AirBnb ebooks hosting reseller (singlehop)

Buy shares of SPY and collect dividends.

dividends

- Freelancing

This isn't passive.

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