10 Ways to Earn Passive Income

What Qualifies as Passive Income? It’s Time to Get Creative.

The IRS states that passive income can originate from two sources: rental property or a business that does not require active participation, such as stock dividends. But in truth, there are more ways than ever to earn money without clocking in every day. Passive income isn’t a shortcut to easy money—it requires effort and planning upfront. By investing time, resources, or expertise early on, you set the stage to enjoy steady, long-term financial rewards with minimal ongoing involvement.

A backyard patch of green grass next to the sandy beach shore with a bench and a tree.

10 Methods For Creating Passive Income

If you're willing to invest your time, money, or creativity—and ideally a mix of all three—you can generate passive income that just might fund your Santa Barbara dream life.

The facade of a luxury home that's the perfect example of modernism with its geometric angles and white stucco exterior.

1. Own Income-Producing Property

Owning income-producing property like the Exceptional Montecito Estate in the image above and currently available for lease remains one of the most dependable ways to generate passive income. In Santa Barbara’s high-demand rental market, a well-located investment property can provide long-term financial stability. With our Mediterranean climate, strong tourism industry, and college-town energy from UCSB, rentals remain in high demand year-round. Financing may be more selective these days, but for cash buyers or creative investors, the opportunities are plentiful.

Three wooden lounge chairs and a mature oak overlooking a flat-roofed guest house in the background.

2. Rent Out a Home or Guest House

Have a guest house in Montecito like the home in the image above? Consider listing it on platforms like Airbnb or VRBO. These sites let you earn income from your property without giving up full-time control. Santa Barbara’s appeal as a luxury destination means high earning potential—even for short stays.

3. Open a High-Yield Savings Account

While traditional savings accounts offer little more than peace of mind, online banks are now offering high-yield options with rates as much as 20 times higher than the national average. Think Discover, Ally, or CIT Bank. The returns won’t make you rich overnight, but they’re a secure, hassle-free way to grow your money while you sleep.

4. Build a Portfolio of High-Dividend Stocks

Dividend-paying stocks provide two sources of income: regular dividend payments—typically issued quarterly—and the potential for long-term capital appreciation as the value of the stock increases over time. This dual earning potential makes them an attractive option for investors seeking both steady cash flow and portfolio growth. With the right mix of established, financially strong companies—often referred to as “dividend aristocrats”—a well-diversified dividend portfolio can generate reliable income with less volatility than growth stocks. Best of all, you don’t need to monitor the market daily; with a long-term strategy, reinvested dividends can compound over time, building wealth passively while you focus on enjoying life.

5. Try a Robo-Advisor

Automated investing platforms like Betterment, Wealthfront, and M1 Finance handle your investment strategy for you—often with lower fees than a human advisor. These robo-advisors automatically rebalance your portfolio, optimize for tax efficiency, and adjust your strategy as the market changes—all without you lifting a finger. Some even offer hybrid options, giving you access to human financial advisors when you need a more personal touch. It’s a smart, streamlined way to grow wealth passively, especially if you prefer a hands-off approach.

6. Lock In with a CD (Certificate of Deposit)

CDs may not be glamorous, but they’re a time-tested way to grow money with virtually no risk. Choose your term, lock in your funds, and enjoy a fixed return—ideal for conservative investors or as part of a larger diversified strategy.

See current CD rates (Updated Daily).

7. Invest in Index Funds

Index funds track major market indices like the S&P 500, giving you broad exposure with minimal effort. These funds are designed for hands-off investors who want reliable long-term returns without the complexity of picking individual stocks.

8. Purchase Corporate Bonds

Corporate bonds let you lend money to companies in exchange for regular interest payments. They’re generally less volatile than stocks and can offer attractive yields—especially if you’re investing in solid, blue-chip companies.

9. Start a Blog (or Buy One)

It takes time and effort upfront, but a successful blog can generate long-term income through ads, affiliate programs, sponsorships, or even selling digital products. Don’t want to start from scratch? Purchase a blog that already has steady traffic and monetization in place.

10. Turn Your Expertise into Digital Products

E-books, online courses, subscription services—the possibilities are endless. If you’re a seasoned real estate investor, gardener, dog trainer, or chef, turn your know-how into passive income streams that sell 24/7, no matter where you are.

A woman on the beach, staring out at the ocean in Santa Barbara.

The Bottom Line

You could be in the photo above, making money while watching the waves come to shore on any of our beautiful beaches. Passive income isn’t magic—but when done right, it feels magical. Whether you’re interested in building a portfolio, investing in Santa Barbara real estate, or launching an income-generating side project anywhere, the rewards can be life-changing.

If you're considering a move—or an investment—in Montecito, Hope Ranch, or any of Santa Barbara’s elite neighborhoods, I’d love to help. Call me at (805) 886-9378 or email me at Cristal@montecito-estate.com. I’ll make your real estate experience as effortless and rewarding as passive income itself.

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Client Reviews

“It was an emotional experience selling our mother’s home in Montecito that we all loved so much but Cristal made the process easier on our whole family by guiding us through the transaction every step of the way. She knows the market so well and everything she recommended was on point including the asking price, painting, and staging the home, which looked beautiful and helped the buyer envision her new home. We sold it the first day it hit the market with an offer above asking! Cristal did an incredible job communicating with us and the buyer to ensure that the transaction would run smoothly. We highly recommend using Cristal, she was a pleasure to work with! ”

- J & A

“Cristal is a pleasure to work with! Her knowledge of the local real estate market coupled with her amazing listening skills resulted in her showing us an array of homes that were all excellent choices. Her low-pressure patient attitude made us feel extremely comfortable with the whole process. I cannot recommend her highly enough.”

- M.F.

“Cristal Clarke is #1 in her field - and you don't become #1 by luck. Cristal works harder, and longer, and with more charm and patience than any real estate agent I have ever worked with in the past; her calendar has no weekend, her days have no clocks, her only concern is selling your property as soon as possible and for the best price on the market. Am I a fan? You bet!”

- P.B.

“We have used Cristal now several times and cannot express how grateful we are for her expertise, dedication, and unwavering support throughout the entire home-buying process. Cristal is knowledgeable, patient and attentive. Her attention to detail is remarkable, and she consistently went above and beyond to provide us with all the information and resources we needed to make informed decisions. Cristal is a skillful negotiator and advocate. She can navigate complex negotiations with professionalism and grace and felt like a true partner to us in the home-buying process. Cristal has a genuine passion for real estate and a deep commitment to her clients' satisfaction. I cannot speak highly enough of Cristal and her exceptional service. She is a true expert in her field and her dedication to excellence, combined with unwavering support is the reason we choose to work with her for all our real estate buying needs.”

- T.C.

“Cristal is a top-notch realtor who sold my home before it ever went on the market. I had two competing offers that enabled me to get top dollar for my home. Not only is Cristal superb but her team is extraordinary. I cannot say enough about Cristal and her team. They are simply phenomenal, the consummate professionals, who took care of every possible detail, making the sale and transition period, smooth from our end. They are also lovely, caring people, who knew all the right professionals, to get the job done. Thank you, everyone!”

- D.R.

“I could list lots of cool adjectives to describe Cristal. All good by the way. But, that is not why I or anyone should hire Cristal. My reason for hiring her, which proved to be correct, is very simple. She got the job done. And, she does it time and time again and with zero issues. And, that is why she is one of the top agents in the country. End of subject. ”

- M.A.

“Working with Cristal was a complete pleasure. Cristal was extremely patient with us as we evaluated nearly 2 dozen homes over a span of 2 years. Her knowledge of the market is unmatched. Cristal provided us with exceptional counsel as we evaluated opportunities and negotiated pricing. The closing process was handled thoroughly and efficiently. We could not be happier with our purchase and even more happy to now call Cristal our friend.”

- D.K.

“Cristal Clarke has conducted numerous real estate transactions for me beginning 13 years ago with the purchase of a Lemon Ranch. She has handled both large and small purchases and sales with equal dedication. As a negotiator, you can’t find anyone better. Her transactions are always conducted in the most appropriate and professional manner. Cristal has considerable knowledge of the Santa Barbara market.”

- S.N. Decker Ph.D.

“Living in Europe, we were to say the least, unaccustomed to the nuances of Real Estate acquisition in California and Cristal steered us through the process with absolute professionalism and personal attention to detail at every turn. Her in-depth knowledge of the market place combined with enthusiasm and drive was the only reason we secured the property of our dreams and will be forever grateful. If you are looking for personal discrete and private representation of the highest quality we suggest you look no further than Cristal Clarke.”

- Johan and Paula van den Berg

“Cristal is very straightforward, cheerful, helpful, professional and trustworthy….we felt very lucky to work with her.”

- John and Lacey Williams

“After considering our many choices, we are grateful it was Cristal Clarke of Sotheby’s International who represented the sale of our Montecito cottage. We are familiar with Cristal’s reputation of hard work and dedication to clients, but it was her attention to detail that made our experience so positive. She offered suggestions for staging the property, worked in harmony with potential buyers and was even able to secure back up offers. The sale of our cottage was completed much sooner than we expected, due in great part to Cristal’s professional skills and support. We highly recommend Cristal as a first choice for anyone needing representation with real estate.”

- Michael & Nancy Lee

“Our experience in working with Cristal Clarke resulted in the successful and discrete acquisition of a property which was not yet on the open market. Her knowledge of the Montecito/Santa Barbara area and vast expertise blended with her passion for real estate and architecture, provided us with the very highest level of professionalism and personalized services. Cristal exhibited a rare combination of excellent communications, attention to detail, creativity and patience.”

- Richard and Catherine Frinier

“Cristal really breaks the mold. She knows every nook and cranny of this real estate market, understands value, and follows up on everything, all the time. She was incredibly patient with our two year quest to find the perfect house. Every house hunting trip from across the country was well planned, and our time was never wasted. On top of her professionalism and expertise, she is delightful to spend time with. We are thrilled with the home we purchased, and grateful to Cristal for so wisely advising us through this process, right through to the close and beyond.”

- Laurie Siegel

“We met Cristal first in the course of renting a winter home (for three years), then buying a house using her as our agent. She was amazingly good at listening to our wants and showing us homes that fit our needs. Her mastery of the paperwork was perfect. Most importantly, there was never a situation where we doubted her straightforwardness or integrity. If we do another real estate transaction in Montecito (which I doubt, we’re happy with what we purchased), without question we’d use Cristal again.”

- Ken Saffir

“Susan and I just want to thank you for your efforts in the sale of our home. You are really quite amazing. Your competence, persistence, optimism and humor made the entire process effortless. Every problem that arose, you somehow fixed; any obstacle, you overcame. We have bought and sold many homes. It has never been such a painless and enjoyable process!”

- Michael & Susan Marquart

“A little something about “our” realtor, Cristal Clarke. My wife and I came to Santa Barbara about fifteen years ago looking for a seasonal home from which to enjoy the weather and amenities of the central coast. Being in the real estate business myself I was familiar with agents and brokers so entered the market with open eyes. We “flipped” a few houses in the early years, dealing with various agents and finally ended up in Montecito. That’s when good fortune put us together with Cristal. To say we were impressed is to put it mildly. Cristal really knows the market. She is familiar with the area, its history and trends. When we have questions about a particular property she either has the answers immediately or gets back to us by phone or email. There is no waiting or wondering with Cristal. She is an agent who is “on top of it.” Her recommendations as to price points, contractors, inspectors and title agents have proven to be exceptional, showing great insight and the highest professional standards. We consider ourselves exceedingly fortunate to say that Cristal Clarke is our realtor and would recommend her services to any serious buyer or seller.”

- Rob & Judi Kelch