Passive income jobs: Can you make money without a lot of effort?

For this week’s No More Ls column, we’re looking at the lessons that come from unexpected sources of passive income. 

Passive income has the appeal of Homer Simpson’s laziness paired with Lisa Simpson’s ambition. And for some Canadians, that combination is precisely the goal: to create passive streams of income that don’t need them to be in the weeds of a business every day. But forget the influencer-manufactured fantasy of sipping cocktails while the dough (not “d’oh!”) rolls in. Let’s set the record straight on what makes a passive income stream work, and what doesn’t. 

Passive income job ideas for Canadians

From peer-to-peer lending accessories for special occasions to selling digital renderings of your art, brainstorm passive-income ideas that will complement your life—not complicate it. Otherwise it’s not passive. 

If you need a place to start planning for your source of passive income, think about the hobbies and interests that keep you occupied outside of your work. If you already paint or draw, for example, consider selling digital renderings of your art online. Love writing? Create downloadable books. If you love hosting dinners and parties, consider renting out your festive decor. You can even rent out special occasion dresses or accessories—like a designer handbag or a pair of trending heels—on peer-to-peer or specialized consignment platforms. Have kids that have outgrown their stuff? Rent out strollers, beds, chairs to tourist families on peer-to-peer baby gear platforms. The list goes on and on. Does your day job having you creating forms or designing templates? You could earn extra money for downloads on the side, if it’s OK with your place of employment.

How much do you need to create a passive income stream?

Here’s the hard truth: For most passive income streams to work, you need to invest some money, at least initially. This is a sentiment that Toronto-area vending machine operator Stephen Ferritto has come to understand after two decades in the business. 

Ferritto began vending at 16, drawn by the comparatively low startup costs and the ability to scale his business gradually. Unlike with other more capital-intensive businesses, the vending machine business allowed him to grow in proportion to the opportunities he secured. Ferritto says how much money you make in the vending machine business depends entirely on how many locations are willing to place your vending machines.

He adds that someone new to vending could reasonably buy one or two machines with an initial investment of about $5,000 and begin placing them in high-traffic locations, such as offices and schools. 

But steady growth requires patience plus reinvestment. His own operation, which Ferritto built to include dozens of machines across the Toronto area, earned $15,000 to $20,000 a month in gross revenue.

Getting there, however, required significant upfront investment—about $3,000 per machine, plus inventory (think candy, snacks and pop), plus maintenance costs—and a willingness to manage the less glamorous details of the business, such as closely monitoring snack expiry dates to adjusting product mix based on demand. (Hey, some of us go through seasons of sweet and savoury, right?)

“If you have to spend time on the business regularly, that income is no longer passive. If it gives you stress, it’s not passive income,” says Ravi Chhabra, a CFP based in the Greater Toronto Area. “If you don’t enjoy whatever you are doing for it, it’s not worth it.” Some under-the-radar ideas include renting out a room, garage, or parking spot on your property, explains Chhabra.

Ferritto’s vending machine operation didn’t scale overnight. It took him years of relationship-building to grow his network in the niche industry and build a reliable customer base that keeps earning him passive income each month. 

Is passive income truly a set-it-and-forget-it way to earn money?

Don’t sit back and relax just yet: You’ll have to put in the work, at least in the beginning. You’ll not only need a business idea, but also the time to spend scaling your business in the early stages and an initial investment to get the business up and running.

For example, websites like Etsy charge set-up and listing fees—if you decide to put up your art or digital prints for sale. In Ferritto’s case, he needed to save up money to buy his first few vending machines.

In his years of experience as a vending machine operator, Ferritto realized early on that he needed to dedicate time and energy to learning what sells and what doesn’t sell before the business could gain momentum. “If a machine can hold 10 bags of chips but only sells five a week, you might only need to stock six,” he says. “Or if, say, sour cream always sells out, you keep two rows of that.” And the same holds true for other passive income jobs: understanding what makes you money is key.

These days, technology helps Ferritto and other vending machine operators refine those decisions. “Product tracking now allows you to know exactly what you need to bring,” he adds, noting that accessing this data has helped him reduce waste and improve efficiency. 

For all its reputation as a hands-off income source, vending (like most passive ventures) requires active involvement at the outset. Ferritto attests to the commitment that was required of him. “If you’re not willing to do the work, don’t do it.”

Passive income jobs require maintenance

Once you gain traction with your passive income business, the systems you build can help you streamline your processes. The passive element usually emerges in systems built over time. 

For example, after scaling his operation, Ferritto hired a driver to handle restocking and servicing, allowing him to step back from daily operations. “Now, I’m making $1,000 a month in passive income,” he says. The trade-off is lower margins in exchange for time, he adds.

That flexibility, he argues, is what makes asset-based income streams appealing. Unlike a traditional storefront, vending machines can be added, relocated or sold with relative ease. Growth can be accelerated or slowed depending on available capital and time. “You can take it where you want,” he explains.

For other forms of passive income, flexibility can look different—for example, it could mean cost-cutting across your business to make investments in other areas, like marketing.

Here’s the hard truth about earning cash with little effort 

Reliable and credible beats the get-rich-quick fantasy. Chhabra points out that some of the simplest passive income strategies are generating interest and dividends through investments. 

You can also make good money decisions. “To generate passive income while spending, pick the right type of cash back credit card that suits your spending habits best,” he adds. But to earn meaningful passive income, Ferritto emphasizes that Canadians should focus on building sustainable operations rather than chasing quick returns. “You’ve got to put the puzzle pieces together.”

And, as Marge Simpson might say to her husband and daughter, “Slow and steady wins the race.”

Read more from this issue of The Get:

1. Costco super-fans share shopping tips for major savings  
2. True or false: Your car is a writeoff if you’re self employed
3. Musician Isis Salam on turning creativity into long-term capital
4. Can I use a credit card to pay for college?