Make Money While You Sleep, Seriously

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Let’s Make Money While We Sleep

No cute introduction — let’s just cut to the chase. There are countless ways to make money in your sleep, as well as with very little effort. I was inspired to make this post after reading Warren Buffett’s Berkshire Hathaway’s (BRK.A) recent quarterly financial earnings results.

That’s right.

Warren made 4X more money off his investments than he did actually running businesses. His investments, completely passive, added nearly +$32 billion to BRK.A’s net income for the quarter.

That’s the dream right? Have your investments make you more than your earned income. Well, in this post, I’m going to explore a lot of ways to make money while you sleep.

Starting with the Obvious

They’re not sexy. They’re not lucrative (usually). They’re not exactly tax-advantaged. But, they’re super easy to obtain and grow.

In case you’re unfamiliar, every quarter publicly traded companies report their financials to their shareholders (you and me). After a company has paid their employees, reinvested into their business, purchased their new equipment, whatever — there’s usually money left over.

This "money left over” is formally known as net income, or earnings.

From this pile of money, the company’s management team pays out their shareholders cash — simply for owning their stock. I mean think about it, when you own a company’s stock you own equity in that company. As an equity shareholder, you’re entitled to your respective share (no matter how small it may be) of the company’s profits.

The company pays out cash to their shareholders every quarter — otherwise known as a dividend. 

Now you’re asking “Okay Austin, what companies pay the most in dividends?”

Great question. Here’s a quick list of some well-known companies that pay a cash dividend to their shareholders:

• Apple (AAPL)

• Qualcomm (QCOM)

• Unilever (UL)

• Clorox (CLX)

• Citigroup (C)

• Gilead Sciences (GILD)

• Ambev (ABEV)

• Nvidia (NVDA)

Here’s the deal though — they’re all paying different amounts of money to their shareholders. Considering to get a dividend you have to own a share of the stock, there’s actually a formula you can use to think about the “best paying” dividend stocks.

It’s called a dividend yield and it’s calculated by dividing the annual dividend by the price of the stock.

For example, Qualcomm pays $2.72 in cash to their shareholders every single year. If you take this $2.72 and divide it by the current share price of the stock (~$155) you get the dividend yield.

Think about this as the cash on cash yield against your investment.

By spending $155 in cash on Qualcomm stock, you’re now yielding $2.72 in cash — or about 2% — every single year. The cool thing? These dividends are likely to increase over time. Qualcomm just announced this week a +10% raise of their dividend.

Keep an eye out for companies categorized as “Dividend Aristocrats,” aka companies who have paid out and increased their dividend every single year for the last 25 years. Here’s a link to a list of all 65 of them on the stock market in 2022.

There are a ton of people whose life passion is to build a well diversified and growing dividend portfolio. A few folks who come to mind are Dividend Growth Investor on Twitter, Andrei Jikh on YouTube, Dividend Seeker on Twitter, Dividend Hero on Twitter, and my favorite — Dividend Sensei on Seeking Alpha. 

Attainability Score: 10/10, incredibly attainable for anyone

A Bit More Sexy

Let’s be real, this one is super sexy but super cumbersome depending on the specific circumstance. I’m not going to pretend like I’m some real estate mogul who can walk you through scaling an Airbnb business — but I will share with you how I’ve been able to earn passive income through real estate investing.

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Real Estate Investment Trusts (REIT)

Remember the whole dividend thing we were just talking about? REITs are identical, except the dividend paid to you is not exactly a share of company profits but instead a share of the company’s rental income.

This is real estate, so the companies managing these properties are collecting rental income from their tenants. As a shareholder in a REIT, you’re entitled to that rental income. That’s a very high-level explanation, so if you want to get into the weeds of things read this.

There are REITs for just about anything, with some of the most popular being cell phone towers, casinos, and retail stores.

American Tower Corporation (AMT) is a popular cell phone tower REIT — they pay out a ~2.4% dividend yield to their shareholders.

VICI Properties (VICI) is a popular casino and gaming REIT — they pay out a ~5.2% dividend yield to their shareholders.

Realty Income Corporation (O) is a popular retail store REIT — they pay out a ~4.5% dividend yield to their shareholders.

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Traditional Real Estate

Let’s be real, there’s not “traditional” about investing into real estate online.

As you all know from my TikTok video updates, Fundrise has been my go to platform for real estate investing. In 2021, they delivered ~23% returns for their investors according to this detailed summary. Personally, I started my experiment in August, so I only saw 18.5% of that ~23%.

Similar to a traditional REIT, Fundrise pays out a dividend to their investors. They allow you to choose an investing strategy (income, growth, or balanced) and returns are different depending on your decision.

There’s also a few other companies out there that allow you to invest in “traditional” real estate online — the only other one I’ve personally tried, however, is Burrowvest. My friend Antoine built it last year and just launched his first property on the platform. Similar to Fundrise’s “invest as little as $10 into real estate,” Burrowvest sells “bricks” of properties for $10.

Burrowvest allows you to choose the specific project you want to invest in vs. Fundrise’s sort of “take my money and invest it into whatever you’ve got cooking” mentality.

I tossed $500 toward Burrowvest’s Indianapolis Airbnb (below). According to their models and expectations, the property should be able to generate ~8% cash on cash returns annually.

If you’re a nerd like me and want to comb through their financial projections, click here.

Considering the stock market doubles (2X) the value of your initial investment every 7 years on average, being able to theoretically double my money in less than 5 years sounds great.

Finally, there’s the actual “get a mortgage, buy a house, rent it out” strategy.

I’ve personally never done this, but it’s important to note that the real money is not made from the monthly rental income — but instead from the equity built within the home.

Think about it, a home you’re living in and paying a mortgage on is more like a savings account. Sure, you’re paying interest on your debt, but the monthly mortgage payment isn’t exactly disappearing. It’s being used to pay down the debt on your home which in turn increases the amount you get to keep (equity) when you go to sell the place.

Rental income can be lucrative, but with all of the one-off expenses I’ve heard you’re lucky if you break-even. The real magic is that someone else is paying off your mortgage, therefore building your savings account. When you’re ready to sell the home, the price of the home has increased and the debt on the home has decreased — made possible with someone else’s money.

Again, haven’t done this — but I want to.

Attainability Score: 10/10 for the online platforms, 4/10 for the IRL rentals

Boring Businesses

This last technique is the most fun because you have complete control over the outcomes. There are countless businesses that can be started with less than $10K in initial capital, sometimes even just $5K.

For example, my friends recently purchased a 10-count vending machine business here in Nashville, TN. They bought the machines (and their contracts at local universities, hospitals, museums, etc.) for $40K — or about $4K a machine.

They purchased the business on this website.

Every Sunday, the two of them head to Costco and fill up on snacks and drinks. They spend a few hours shopping and refilling the machines — then cash flow a few grand each month after everything is accounted for.

Their “shopping and re-filling” could technically be taught to a student in college looking for a weekend side hustle — so technically speaking, this could be a “make money in your sleep” idea.

If you’re interested in learning more about their business, we’re co-writing this Substack below. Completely free to subscribe — and it’ll stay that way. Nothing shared just yet, but the About page explains what to expect.

We’ll also be sharing videos to this TikTok channel.

Another business I’ve seen a lot of people try are ATM machines.

Airports, gas stations, malls, and even barbershops. The machines cost ~$4K or less, you keep ~$2K in cash in the machines, and after paying the establishment and network fees you’re netting ~$1.50 per transaction. That could be hundreds of dollars per month in passive income, assuming you’ve hired someone to re-fill the machines.

Attainability Score: 6/10 for both, upfront capital required

There you have it!

A handful of ways to begin making money while you sleep, while starting with as little as $1 (fractional shares of dividend paying stocks). Rome wasn’t built in one day, and neither are your passive income streams. Start today, reinvest the money back into the business / stock / real estate, and keep compounding those returns until they grow into a meaningful amount of money.

Here’s a fun project — go look at your monthly budget and separate out all of your “fixed” expenses from your “wants and savings.” Rent, food, transportation, etc.

Now figure out exactly how much you need to have invested to completely substitute your earned income with passive income. To put numbers behind this, if you’re investing into a stock paying a 5% dividend yield you’ll need ~$550K invested into the stock before the dividend paid to you can completely substitute your earned income — and pay for your living essentials.

Right?

Do the same experiment — figure out what that number if for you and get after it! 

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.