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If you are trying to bring in some extra income, a lot of people will turn to passive income methods. Passive income is where you make an income on the side but with minimal effort. It can be achieved through various methods such as rental income, multifamily investing, advertising revenue through a blog, or selling templates, amongst other things. 

When deciding what passive income approach to take, there are various things you want to consider. The time to set up the passive income idea? How much money will the passive income approach bring in? What are the risks involved? By being as prepared as possible and doing as much research as you can, you’ll increase your chances of success. 

To help you, we have put together our guide on considerations before deciding what passive income approach to take. 

How much money will your idea bring in? 

As we touched on above, there are various ways to bring in a passive income. Each method will bring in a different amount of money, with some methods bringing in more the increased amount of time you spend on it. For example, if you run a blog, you can make advertising revenue through sponsored posts, sponsored competitions, affiliate networks, and online ads. The amount you make from the advertising will increase through the number of views you get. This means a blog can potentially bring you in more money, the more you work and develop it. 

What are the risks involved? 

A really important question to ask yourself is what are the risks involved with the approach you want to take? Some ideas will involve minimal investment with lots of time attached initially. Other ideas will require a large investment but a low amount of time. An example would be the housing market. A passive income could come from buying a property and renting it out. The risk of this is that it will require a large deposit and you will be liable for the mortgage payments, even when tenants don’t pay. 

The time to set up your idea?

How long will it take to start up your passive income idea? Your idea may be great and will bring in a lot of money but does it take a long time to bring money in? This isn’t necessarily a bad thing, however, it’s something to consider, especially when comparing your passive income ideas. You may want a passive income right away or you may be happy to wait and build up an idea for a passive income – this is why you want to consider the pros and cons of all the approaches you want to take. If your idea turns out it will be a good hobby that makes money, then you may be more likely to wait. 

What considerations would you recommend before deciding what passive income approach to take? Which of the above tips did you find most useful? Are there any tips that you think we should add to the list? Let us know in the comment box below.