How to Earn Passive Income Online

Steps to passive income online

Today I'm going to show you how to make passive income online. I'll be showing you 3 different business models that you can choose from to start with so that you can build a business that works for you.

If you'd like to see specific examples from several different businesses that I own, here are 9 ways that I earn passive income online:

With that said, please read on for some really important information about this desire we all have to earn passive income, because there's a lot of information about it online, and not all of it is true.

There are several different definitions of passive income. I'm aware of the traditional definition, such as earnings derived from a rental property, but there's a better way that I have years of experience with and have also taught tens of thousands of others to do.

It involves building online businesses that take advantage of systems of automation that allow transactions, cash flow, and growth to happen without requiring a real-time presence.

In other words, we don't trade time for money. Instead, we invest our time upfront to create assets in the form of an online business that can continually pay us back later.

There are several different ways to achieve this, and the 3 models I share in this video will give you an idea of how you might approach an online business that works for you.

COMMON QUESTION #1: Does generating passive income mean you don't have to put in any work to earn money?

No. Not at all. Creating various passive income streams takes time and a lot of hard work. It's about building a real business that solves a problem, and creating systems, or hiring people such that it can be run on auto-pilot.

COMMON QUESTION #2: Can you create a passive income stream that requires zero upkeep or attention that will pay you back forever.

No. All passive income streams, even traditional ones, require some form of upkeep and maintenance. Real estate portfolios and market investments cannot (correction – shouldn't) be walked away from forever, and neither should any type of online business.

With that said, however, online businesses can be fashioned in a way so that you can walk away from it for a while and it can still continue to run. An online business is a storefront that is open 24 hours a day, 7 days a week (even on holidays), and much more than real estate or market investments, building an online business gives you a lower barrier to entry, as well as a lot more potential upside.

Just think – how much would an extra $1000 per month help you? Imagine how much it would cost to invest to obtain an additional $1k per month in tradition forms of passive income, while building a business online is much more achievable.

Let's do some math to give you some perspective:

Imagine you sell a $25 product. You only have to sell 40 of them, per month, to earn an additional $1000/month.

Imagine you sell a membership into your program for $25 a month. You only need 40 members to generate an additional $1000/month. But then the next month, you obtain an additional 40 members who also pay you $25/month. Now you're making $2k per month.

The most important thing, however, is that whatever product or business you create, that it helps solve a problem. All good businesses solve a problem in some way, shape, or form, so make sure you watch the video to learn exactly how you can approach building a business online of your own.

Links mentioned in this video:

SPI Podcast Interview with Brian Casel:

Tools I used to start selling my first product / ebook:

Also watch 3 Passive Income Myths, BUSTED:


Subscribe to this YouTube channel:


Want to learn more about the smart way to make money online and start a successful online passive income business (without ripping people off or being dishonest)? Then make sure to visit the Smart Passive Income getting started page below:

New and updated: "Podcast Marketing in 2020 (Top 5 Podcasting Tips that Get More Downloads and Subscribers)"


Are you a YouTuber? Then check out Tubebuddy, my favorite YouTube add-on that helps me do keyword research, rank higher in search results, get more views, and gain more subscribers. Sign-up for a 30 Day Free Trial of TubeBuddy here:

48 thoughts on “How to Earn Passive Income Online”

  1. Shayan Ghafary

    Hey Pat, thanks for the video. And thank you for emphasizing that passive income takes hard work at first to achieve. Just by you saying that actually motivates me more. Cheers!

  2. Undercover Architect

    Such valuable information Pat – thank you for sharing these models and breaking them down. Really excited to be implementing this more in my business. The EP model is the best fit for me, and it would seriously help me leverage my time and have more flexibility with my family. Also love the new format for “Ask Pat” podcast – so much gold in those episodes 🙂 Thank you!!

  3. TruFinancials

    Love the rant and being upfront with people about the hard work that goes into creating passive income. The EP model is what I’m going towards. Using YouTube as the starting platform and go from there. Great video Pat!

  4. Shoshanah Shear

    Thanks Pat. This is exactly what I needed. I was trying to figure out whether to concentrate on freelancing or passive income. Thanks for answering this.
    Another excellent video 🙂

  5. Just what I needed today for further clarity of my ONE THING for this period of this entrepreneurial journey. Again, Pat comes through! Hope the trip from Fantasy Land to back home was a smooth transition for you and family. Thanks for the great content.

  6. Cathy Sirvatka

    What a great summary of the different pathways to passive income!

    I find sometimes it’s difficult to get accepted to be an affiliate. I’m a web designer (so I guess I’m FA) and my niche has specific equipment needs. So I applied to a couple of companies that sell just the stuff they need. Though I followed all the rules (terms of use page, etc) I was turned down. Maybe not enough traffic yet?? It was disappointing.

    You encourage me to keep trying and working at growing my following!

  7. Matt Henderson

    Another great video Pat! I started listening to you back in June 2017 and it is changing my life. I have created 2 new businesses and looking to get going on theEP model next. Thanks Pat!

  8. Zakiya Alake

    Thank you, Pat. Helpful video. EP is the best model for me. Combining my lived experiences with my education in several fields, I can crank out e-products as gifts while I build my audience.

  9. Thanks Pat. Great video. You’re absolutely right about the audience and advertising model. It takes time and doesn’t guarantee a fast turn around. I think the EP model works well and it’s not restricted to your core skills like the FP model. One can piggyback on other things out there too. I plan on turning on the passive income switch once I can find a full time job to keep things stable.

  10. If someone wants the fast, magical way, then they are in the wrong place. The reality is that this stuff is hard. I want people to succeed, and I want to be the one to help them. Thanks for being here!

  11. Great Rock Real Estate

    What a great no BS video Pat! We have been investing in real estate to build passive income for the past 10 years but as you pointed out it does take a fair bit of money to get going. Lately the real estate markets have been so crazy it is hard to buy something that makes sense so i have been looking for an alternative. Looks like I have found a mentor!

  12. Agreed! We’ve also been investing in multi-family apartments for 10 years. Prices are going up, cash flow going down and we are 100% about cash flow (buy and hold!). Taking in all that I can on creating online opportunities. Good luck to you!

  13. Pat. thank you for all of your insights and humorous, approachable teaching style! I’ll take this opportunity to ask if you have a pain point in getting started in real estate investing? I have an investment analysis spreadsheet that I’d be happy to share. Feels like a crowded online space, trying to find a niche.

  14. Great Rock Real Estate

    Based2G yes there are and we can’t wait. There are also some emerging markets around the country that still make sense to buy in which we are looking at.
    I still like the diversification Pat is teaching and I agree with Kathy above it does feel like a crowded online space and I too am trying to find a niche.

  15. +Great Rock Real Estate
    This is just superb, I have been researching “income from online business” for a while now, and I think this has helped. Have you heard people talk about – Qonmily Passive Formality – (search on google ) ? Ive heard some great things about it and my brother in law got great success with it.

  16. Sydney D. Levy Jr.

    Hey Pat, thank you for taking the time out to create a structured video of substance w/ real-life examples. You just gained a subscription from someone who cuts down on his subscriptions every month (not that I have many). I’ve been wondering how to get started with building different streams of passive income based on my knowledge, background, etc, and it never occurred to me that there were actual models to choose from. Much appreciated.

  17. Thanks Sydney, that means a lot! Welcome to TeamFlynn! We’ve got a great community here to help you succeed 🙌🏼

  18. Winner of a video, I have been researching “passive income online store” for a while now, and I think this has helped. You ever tried – Qonmily Passive Formality – (Have a quick look on google cant remember the place now ) ? Ive heard some incredible things about it and my m8 got excellent success with it.

  19. Morgan Tyner

    Awesome video. Really appreciate how you broke everything down, and I am definitely going to refer to this as I continue to build my blogging coaching + consulting online business!✨

  20. Sushant Aryal

    The best way to make passive income is to teach others about making passive income

  21. Digital T-Shirt Shop

    I really enjoyed the video. Great information. I’ve been struggling with this for years… moving from me doing all the work to letting my tools do the work. I’ve had small successes here and there, but nothing major to write home about. Anyhow, thanks for the great tips and inspiration.

  22. Boey Bear - Toddler Learning Videos

    A great video, Pat – thank you! You summarise it simply yet effectively 💛

  23. Angelique Roux

    FP = service-based freelance (to get started) to problem-solving product
    AA = audience & advertising (affiliates, Adsense, sponsorships)
    EP = expert (you can be an expert to someone else who knows just a little less than you do) to product (ebook, online course)

    I’d love to hear Pat talk about print on demand & dropshipping businesses.

  24. Steven Clark

    I would say there is another type of passive income from passive investments that go for high returns like

  25. Great info. You guys can also go to *LIVENETJOBS. COM* if you’re trying to make money online. This is what I’ve been doing and I’m happy with my results.

  26. Great info. You guys can also go to *LIVEONLINEJOB. COM* if you’re trying to make money online. This is what I’ve been doing and I’m happy with my results.

  27. This was great, been searching for “affiliate marketing tutorials” for a while now, and I think this has helped. You ever tried – Neyameron Xiydeline Method – (just google it ) ? Ive heard some interesting things about it and my buddy got excellent results with it.

  28. Hi Pat great information, I still have a concern.

    Are any of these models possible part time while still working at your main job? Is it possible to build something with limited hours allocated to it and then grow from it to eventually quit the said job? Do you have to make this leap of faith and be focused 100% to be able to gather the required momentum to make it work or can one slowly build this while still being employed?

    Please let me know your opinion on this

  29. Mere Mortals Book Reviews

    Really like that Pat emphasised the patience and time that is required to build passive income. Needs to be known right at the outset.

  30. Thank you for the rant. I am glad you didn’t lie and say it was easy like most of the other people out there.

  31. Dickson Grant

    Professional guidance brings about remunerative results. Great job Payden, you exceeded my expectations. Thank you.

  32. Edwin Van der sar

    It’s no secret that when it comes to trading profitably, Payden is indeed the right man for the job. No doubt about that.

  33. I’m interested please. I want to build my portfolio, and trade profitably.

  34. Dickson Grant

    Oh that’s quite easy. Payden has helped me build my portfolio over the years, and make profitable investments. Reach him on … *Xanderpayden (a) g ma il. Com…* for further inquiries.

  35. Clara Borough

    Funny enough, I got on his trading program too. Although I feel the commissions are quite high, excellent service overall.

  36. Olivia Haviland

    As a new investor, Alec helped me become more confident, and to trade additional asset classes as my skills grew.

  37. carrie anderson

    @Mauricio Gonzalez well he actually had a good standpoint. The gig about anything online is that the house always wins, I make my own income passively using this idea. I definitely would like to air out more information on this to You if you need it

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