10 Passive Income Ideas for Nomads

When it comes to earning money passive income streams are the holy grail, the bees knees, the crème de la crème and the dogs ******** all rolled into one.

The premise of passive income is that it is something that once setup will continue to generate you continuous income for the foreseeable future and critically…. with no (or very little) ongoing or active involvement. Imagine spending a month building (or buying) a small, efficient, little robot that goes to work for you, does the heavy lifting and then continually brings you home the sweet sweet money.

In this blog post we will go into detail about some of the best and most popular passive income ideas that can be implemented by nomads who can use them to fund their journeys, their adventures and their explorations. Some of these will require money to start whilst others need only time, perseverance and discipline.

Some of the ideas below will require you to have skills and experiences in areas but others will rely on you monetising your travel experience by developing content that adds value to others by being either useful or entertaining.

It should be said early and before we start that none of the ideas below will be get rich quick schemes and those that produce large amounts of passive income will require large amounts of effort (or money) to start.

Stock Photos

If you are travelling anyway as a nomad, it is highly likely that you will already be taking photos of the wonderful places, events and experiences going on around you. The pictures you take can then be transformed into stock photos which can be licensed and sold through online sites such as Shutterstock or iStock. Each time one of your photos is downloaded then you’ll be paid a small fee.

Positives

• Its likely you’re already taking these photos so effort will be minimal
• Photographers often have high travel costs to get to locations – this can be avoided as you are passing through anyway

Negatives

• Good quality photos are required which takes experience and practice
• Camera gear is expensive to purchase in the first place
• Photo editing will be needed and if you cant do this yourself you will need to pay somebody

Overall if you already have the gear and are a keen photographer this is a great way of making a small amount of income on the side whilst capturing memories of your journey forever. If you have no experience of taking photos, editing and would need to buy an expensive camera/lenses to start then there may be better options.

Property Rentals – Personal Ownership or Crowdfunding

Often this is the recommendation you will see first when looking for passive income ideas… especially as a nomad. Personally I didn’t want this to be number one on the list because although it is a method I have used successfully for eight years now I know that it has a high barrier to entry that is difficult for many to overcome.

Personal Ownership

If you are a property owner prior to moving to a nomad lifestyle then renting your house/apartment is the easiest way to obtain your first passive stream of income. Personally I own a buy to let property and each month money is transferred into my bank account from my renters for me to spend as I see fit. Although I currently live in the nearby area and operate it myself I could (and will) easily pay a company to manage the property for me. This would result in a smaller profit but no requirement for me to resolve issues, find new tenants and conduct repairs.

Unfortunately buying a bespoke buy to let property is expensive because interest rates, deposits and affordability checkks are much higher than for a residential property so the best method is to:

• Buy as a residential property to live in
• Rent at least one bedroom to generate cash (see https://thenomadwallet.com/how-i-live-for-free-house-hacking/)
• Rent it as a buy to let as you move to a nomadic life (at this stage you should tell your mortgage lender although many do not…)
• Enjoy the income and use it to help fund your nomadic lifestyle (just don’t forget to save a portion to pay your tax bill)

Crowdfunding/REITs

For those who don’t have the weight of a house deposit residing in their bank account but want to earn an income through property at a smaller scale then either crowdfunding or investing in a REIT could be the way to go.

Crowdfunding – A real estate crowdfunding platform can be used where yourself and many other investors pool money together to purchase properties. From here the profits are shared amongst the group and paid out to you (usually monthly).

Pros – Minimal investment required and regular income. No direct involvement. Earn returns from rental income and capital growth (property prices increase).

Cons – Platform/management take a percentage of the profits. Your money is at risk as an investment.

REITs (Real Estate Investment Trusts) – are similar to the above crowdfunding method but instead of owning a percentage of a property or properties you own a share of a real estate company that owns large numbers of properties.

REITs have to meet a number of requirements to qualify and are usually traded on major stock exchanges. These REITs will own various types of real estate such as offices, apartment blocks, housing, hotels etc. Real Estate ETFs also exist which usually allow you to diversify further by investing into a number of REITs.

Positives – legally must pay out a minimum of 90% of their income to shareholders as dividends (most pay 100%). Diversified by owning multiples types of property.

Negatives – By being so diversified returns are often lower as many types of real estate do not provide as good return as others.

The major drawback of crowdfunding and REITs compared to a more traditional rental property is that you are usually unable to take advantage of leverage. For a rental this is in the form of a mortgage as you can take all the profits whilst only owning 1/4 of the property.

YouTube

Difficult to tackle, a lot of work and with no initial reward. YouTube is a hard nut to crack, but do so and the payoff can be enormous. If you manage to gain traction, build followers, create great content and become monetised a YouTube career can lead you to great riches. It’s hard, the hours will be long and the road difficult, but persevere and the benefits can be gigantic.

Although technically each video you post will provide you with passive income (once you are monetised) your channel will require updating to stay relevant if you want to continue to drive traffic your way. Travel vlogging has become a way of life for many and some of the most successful are:

Drew Binsky – 2.8M Subscribers – A focus on discovering and celebrating unique countries and cultures across our world.

Kara and Nate – 2.69M Subscribers – Highschool sweethearts who documented their travels to 100 countries and now beyond

Kold – 1.24M Subscribers – Incredibly talented filmmaker with cinematographic mastery.

Each of the above likely make hundreds of thousands of dollars each year just from YouTube income but you don’t need anything like the number of subscribers they have to earn an income.

Positives

• No ceiling on income potential
• By creating a following and a network other opportunities are available (products, affiliates, courses etc.)
• You can base your channel around what you love

Negatives

• Competitive and hard to break into. If your content doesn’t give value you can forget about being monetised.
• Will see zero income unless you become popular enough to be monetised (1000 subscribers and 4000 hours of watch time over the last 12 months).
• Your production quality and value needs to be good to attract attention
• Promotion of channel is key

Online Store

Running an online store can be time consuming and hugely stressful but if done correctly you can set it up to remove yourself as a cog in the machine. Some of the best ways to do this are:

• Don’t stock physical products – use a distribution house or create the product ‘on demand’ and send direct to the buyer
• Out-source as soon as you can – Don’t feel like you need to do everything yourself and pay others where possible. Customer service, delivery, production can all be outsourced.

Website creation is also now much simpler than it ever has been and there is no real requirement to be able to code to run a simple and streamlined online store.

The 4-Hour Work Week book by Tim Ferriss is a great place to learn how to apply these principles – https://tim.blog/

Positives

• No ceiling on potential income
• Can outsource completely if required
• Can be sold

Negatives

• Lots of work to set up as a passive stream
• Often requires outsourcing (who need managing initially)
• Need a product/service to sell

Affiliate Marketing

Affiliate marketing is a hugely powerful tool and can help give your passive income a major boost. Essentially you market other peoples/companies products and receive a percentage of any sale you generate. The way you market this is up to you but in most cases it can be done passively through a website, blog, podcast, YouTube channel etc.

Positives

• Simple and easy to set up
• No requirement to create or design a product
• No need to ship and stock product
• No money at risk or needed
• Multiple affiliates can be ran at the same time

Negatives

• Requires an existing audience to market the product to which is difficult and time consuming to curate.
• The products you market must be suitable to your audience and of good quality to build loyalty

Stock Market

Investing within the stock market is potentially the simplest way of making passive income on this list but comes with a number of risks. Money you invest in the stock market is at risk so it is essential that you diversify and understand the principles. For more information read https://thenomadwallet.com/should-i-invest-in-the-stock-market/

By investing sensibly in the stock market you will likely see the value of your money fluctuate but slowly trend upwards as the businesses you invest in grow and become more and more profitable. Personally I recommend investing in broad based index funds which track the entire markets instead of individual companies. This has the benefit of:

• Diversifies your portfolio – You will be invested in every company within the market you choose
• Returns outperform in the long term – The longer you invest in an index fund the more likely you are to beat most expensive managed funds.
• Simple – You can simply setup a standing order to buy more each month and it requires no managing.
• Cheap – Fees for index funds are the lowest you will find

There are two methods for creating passive income from the stock market and these are:

Dividends

If a company has grown to a size where they no longer need the income they earn to expand and grow they will begin to pay these out to shareholders in the form of dividends. This incentivises investors and prevents too big a build-up of cash.  A decent dividend yield will be 2% to 6% each year but a number of factors can affect this (bigger doesn’t necessarily mean better). Dividend paying stocks are usually in industries such as food, energy, real estate, telecommunications and healthcare. Some well-known companies are:

• Coca-Cola (3.1%)
•  AT&T (8.2%)
• Exxonmobil (6%)
• Walgreens Boots Alliance (4.1%)

When looking for dividend stocks look out for those that are dividend aristocrats (which the above are) as they have paid dividends every year for the last 25 years. From the very short list above you may assume that AT&T is the best option available and therefore that is where all your money should go… unfortunately the stock market is not that simple.

As we can see from this news article, the stock price of AT&T has dropped recently meaning that the value of your shares is now worth less which must be considered. To combat this you should invest in an index fund with a focus on dividend yield to ensure that returns are good and risk is minimised.

Share Appreciation

The second method to earn passive income through the stock market is through the value of the shares you own increasing. If you own company X and the value of its share increases from £1000 to £1100 you now have £100 of profit. You could then sell £100 worth of your shares and withdraw the money as income. Personally one of the index funds I invest within is the S&P 500 which is the largest market in America and over the last 10 years returns have been fantastic.

One point to note is that if you do not need the income to spend at the moment it is better to leave it invested and allow compound interest to work for you.

These methods are the basis of the 4% rule which is an indicator or how close to financial independence you are. See more at The 4% Rule.

Positives

• If you purchase index funds then investing truly is passive and requires almost no effort
• You can now buy fractions of shares making it possible for anyone to start
• Dividend income is reliable (especially through an index fund or ETF)
• Returns can be significant

Negatives

• Your money is at risk and a market crash can affect your net worth dramatically
• Stock market investing is a long term game and if you panic short term and sell after poor performance you may lose money
• You need large amounts of money to make a meaningful income as your returns are percentage based.

Royalties

A royalty is a legally binding payment from a third party for the ongoing use of your asset. Royalties are designed to compensate the creator whilst benefitting the user who does not need to create everything from scratch. Some of the most common royalty uses are:

• Music – radio, streaming, films, covers etc.
• Photos – stock photos
• Patents – If you own a patent you can charge a royalty for others to use it without copyright claim
• Books – Publishers often pay a royalty to authors

Royalty payments are typically calculated as a percentage of the revenue created from use of the property. If you were the author of a children’s book sold for £10 you may charge £1 or 10% to allow the publisher to use your work. Royalty payments can be freely negotiated between the owner and the third party and will ideally benefit both.

Positives

• Completely passive once created
• By charging a percentage your income can scale if the third party is successful
• You can sell the same royalty to multiple third parties
• Large variety in the industries royalties are used in

Negatives

• Original and high quality idea/design/product required
• Some industries have low royalties (music streaming)

Course Creation

If you’re feeling a little more inventive and you have skills and experience then perhaps course creation is the way to go. Regardless of your background, if you’re talented at what you do and (crucially) can articulate it well then somebody will want to learn from you.

By creating a bespoke online course it’s no more work for you if you sell one or a million copies. You can run this entirely passively or provide regular updates but the choice is yours. Some of the most popular websites are www.udemy.com, www.skillshare.com and www.newskillsacademy.com.

Choose a niche, create your course, upload it, market it and receive passive income as it is viewed.

Positives

• Huge earning potential
• Minimal updates required
• No extra work (apart from marketing) required to scale

Negatives

• Competitive (there will likely already be multiple courses in your niche)
• Large amount of work required – if your content isn’t great don’t expect many downloads.
• Marketing is critical – people can’t buy it unless they know about it

Blog

It would be a little strange for me to write a post regarding making passive income without at least mentioning a blog. It’s a classic method to generate passive income and although it sounds like something easy to created and get running I can assure you it is not. Expect to have to invest countless hours in to create content and get visitors to your site. Generally a blog is a platform that can allow you to take advantage of other passive income methods (ads, affiliates, selling products) but you can use methods such as member areas/content/groups and charge a subscription to access.

Once your blog has reached a certain size and generates its own income this can be used to outsource to others to create content and manage. It’s also possible to buy an already completed domain to just update whilst collecting the income.

Positives

• Gives you an audience which can be monetised in other ways
• Whilst creating and maintaining a blog expect to learn useful skills that can be applied elsewhere

Negatives

• Large amount of time required to generate new content
• Ongoing time required to keep up to date
• Google ranks new content higher so cannot be just ‘set and forget’

Ads

Finally, for those of us who have some sort of platform like a blog or website then ads can be shown to generate additional income. The most common ad platform is google but there are others. The more visitors and clicks you get the more money you like make.

Positives

• Simple and easy to set up
• Little additional work required

Negatives

• Platform with traffic required

Conclusion

Overall the most important thing to keep in mind when designing and creating these passive income streams is that you need to be adding value to somebodies life. People will pay for something that they either enjoy or solves a problem for them. If you’re product or service does neither of these then do not expect somebody to pay for it.

You may have noticed that having an audience is critical to many of these methods so this is likely the place to start – whether through a blog, a channel or social media it will open up so many more opportunities for you.