The best way to build passive income from scratch depends on several factors. Our credit score, skills, savings (if any), as well as prior experience all play a role. Why is the credit score important? It is only important in the US or in a country with a similar financial system. Without an average or better credit score it becomes a lot harder to get a real estate or business loan. Don't have a good credit score? No problem, there are still many ways to build passive income (I'll share one below). Passive income is not a get rich quick scheme. We need a solid strategy as well as good execution paired with patience to see results. When I bought my first real estate property, I did not have a good enough credit history nor a stable enough income to get a decent loan from a bank. My parents agreed to co-sign with me, since I had a proven track record with them on being true to my word. This might seem like a handout to some, but they did not help at all with paying my loan or other expenses. I was old enough to manage these responsibilities on my own. I do not recommend co-signing, even if family members are involved. This option should be reserved for very special and low risk circumstances. But I want to share it here as example. Sometimes we have to find an unusual path to acquire the first asset that can generate passive income for us. I did not buy my first property for the purpose of creating income. It was just a practical option I had seen work well for my parents. If I was trying to earn passive income from real estate today, I would look for an affordable property (maybe a condo) which is just good enough for me to live there. I would find a way to buy it for a good deal and rent all rooms except for mine out to roommates. There are two strategic reasons for doing it this way: 1. Banks are more likely to give you a good loan on a property you plan to occupy yourself. 2. Roommates help with freeing up cash flow, so I don't need to use all of my active income for paying bills.