Unlocking Passive Income: 9 Ways Pastors Can Create Passive Income Today

The term "passive income" gets thrown around a lot these days. From multi-level marketing schemes to starting small businesses, many things claim to be passive income but don’t quite fit the bill. So what is passive income? Why should pastors create their own passive income streams? And what are some of the best ways pastors can create passive income? We’ll talk about it in this episode of the More Than a Pastor show.

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Unlocking Passive Income: 9 Ways Pastors Can Create Passive Income Today

It seems like "passive income" is the buzzword on everyone's lips these days. From multi-level marketing pitches to small business ventures, plenty of things are labeled as passive income—but not all of them truly qualify.

So, what exactly is passive income? Why is it important for pastors to develop our own passive income streams? And what are some of the best ways pastors can create passive income?

Passive Income Defined

To truly understand what passive income is, let’s break down the words passive and income.

1. Passive refers to something that happens without active involvement or continuous effort.
2. Income is money earned from work, investments, or business activities.

Combine these, and passive income means earning money with little or no ongoing effort after an initial setup or investment is made.

Once you’ve built the income stream, it continues generating consistent cash flow whether you’re actively working or not.

The Two Stages of Passive Income

Passive income might sound effortless, but the reality is quite different. There are two key stages to earning passive income, and they both require certain amounts of effort.

Stage 1: The Hustle Phase

Creating a passive income stream is a lot like planting a fruit tree. Much of the effort is front-loaded, with the reward coming at the end. You dig the hole, plant the seed, fertilize it, water it, and wait for it to grow. Then some time later you’re finally able to enjoy the fruit of all your labor - not just once, but season after season.

For example, if you launch a course, you’ve got to brainstorm, research, write, edit, record, publish, and market your course before you finally launch it. This process might take weeks or months of effort to build your stream before you see income from it. But all that work you put into it starts to build momentum, leading to the eventual payoff.

Or if you want to get started in rental property, you’ve got to do a little research to pick the area you want to rent in, then look for houses that are for sale in that area, and pick one that’s right for you. Maybe it will need some amount of remodeling, repairs, or painting before you can rent it out. You might do that work yourself, or maybe you need to find contractors to do it for you. Then you’ll need to market the home, screen prospective tenants, and finally get your first tenant moved in.

Stage 2: The Payoff Phase

Once your passive income stream is up and running, it’s much more hands-off. But it still requires effort from time to time, just like a fruit tree needs occasional fertilizing and watering to stay healthy and produce fruit.

That course you worked hard to create? Now it’s set up to start earning you cash 24/7/365, but it requires consistent promotion along with a little customer service as needed.

That rental house you invested in? Now you’re getting rent payments every month from your tenant. But you still might have to go and collect it in person. Or you might need to make a repair from time to time. Or maybe your tenant moves out in a year, and you’ve got to do a bit of cleaning, painting, and marketing before your next tenant moves in.

So passive income isn’t 100% passive. And it’s not 100% about the income it generates for you right now.

What Passive Income Is (and What It’s Not)

What it is:

1. Cash Flow: True passive income generates consistent cash flow. For example, rental properties, royalties from books, or dividends from stocks provide regular income.
2. Scalable: It builds upon itself over time. For instance, the more books you sell, the more visibility you gain, which leads to even more sales.
3. Minimal Ongoing Effort: After the initial work, you only need to maintain or monitor the income stream.

What it’s not:

1. Trading Hours for Dollars: A traditional job or sole proprietorship doesn’t count because if you stop working, you stop earning.
2. MLM: Some people label multi-level marketing or other high-effort businesses as passive income, but they often require constant recruitment or sales to sustain.
3. Get Rich Quick: Most passive income ventures are actually Get Rich Slowly. In reality, what many label as "passive" income usually requires significant upfront effort, continuous oversight, and regular adjustments.

Why Passive Income Matters for Pastors

One of my goals here at More Than a Pastor Show is to help pastors to grow your income and build financial security.

And one of the keys to building financial security is to acquire or create assets that generate streams of passive income.

When I was a young pastor, an older man from my church, Henry, shared a little financial advice with me that has stuck with me for more than 25 years now. He said:

“Rich, if you want to build financial security for your family, you need to find ways for people to send you money every month.”

Henry was an electrician who had built a successful electrical business and he and his wife had become very wealthy, and extremely generous givers.

But I learned that Henry’s wealth didn’t come from his profits from the business. It came from how he invested a portion of those profits into real estate - mostly rental properties. He had a number of people sending him rent payments every month.

In fact, I was one of them! Henry took me under his wing, taught me about rental property, and gave me the opportunity to buy my first rental house from him on land contract. It as a deal I could not refuse!

Thanks to Henry, I discovered that passive income is key to building financial security.

4 Reasons Why Passive Income is so Powerful

1. Financial Freedom - Passive income enables you to make money even when you’re not actively working.
2. Time Flexibility - With passive income can prioritize your time around what matters most to you.
3. Wealth Growth - Passive income has a compounding effect. It steadily grows over time, creating a snowball effect that can significantly increase your net worth.
4. A Lasting Legacy - By building passive income streams, you create a foundation of wealth that can provide ongoing financial support for your family and future generations.

9 Ways to Create Passive Income

Here are some proven ways to generate passive income, along with examples tailored for pastors and ministry leaders:

1. Turn Sermons into Books

Publish your sermons as books or eBooks. Platforms like Amazon Kindle Direct Publishing make it easy to earn royalties with little ongoing effort.

2. Blogging and Content Creation

Share your expertise through a blog. Monetize through ads, sponsored content, or affiliate marketing.

3. Podcasting

Start a podcast and earn through sponsorships, listener support, or repurposing content into other income streams.

4. Real Estate Investments

Buy rental properties to generate monthly cash flow. This can snowball as you reinvest profits into additional properties. There are three basic types of rentals:  Long term rentals are typically leased for 6-months or longer and provide a permanent residence for a tenant. Short term rentals are typically rented out to guests for a few days to a few weeks through AirBNB or VRBO. Storage space rentals involve leasing out space for for people or businesses to store their belongings, equipment, or inventory.

5. Coin Operated Machines

Start a business with vending machines, ATMs and video games. Open a car wash or laundromat.

6. Online Courses

Create and sell courses based on your knowledge. Once the course is live, it can generate revenue without additional work.

7. Membership Sites

Build a subscription-based community offering exclusive content, resources, or coaching.

8. YouTube Channel

Create videos on a niche topic. Once you meet monetization criteria, you can earn through ad revenue and sponsorships.

9. Social Lending

Lend money through peer-to-peer platforms like Prosper.com and earn interest on repayments.

Getting Started in Creating Passive Income

Creating passive income starts with:

1. Adopting the Right Mindset: Recognize the potential of passive income and commit to building it.
2. Choosing the Right Opportunity: Focus on something that aligns with your skills and interests.
3. Taking Action: Begin with one stream of passive income and grow from there.
   
   

Application & Action

Passive income is not an overnight success story, but it is an over time success story - a powerful way to build financial freedom and security over time.

Whether you’re a pastor looking to supplement your income or someone seeking financial independence, the opportunities to build passive income are everywhere. Remember, the goal isn’t just to make money—it’s to create lasting impact and freedom.

Which passive income stream will you start building today?