First of all to answer your question, it is possible to build a side project to generate a decent amount of income within 2 years with $1k.

If anyone tells you otherwise, they are wrong.

I know this for a fact because; when I was 14 with little coding experience (I had played with HTML at 12) I decided to start making money online with $0.

I'm not going to go into everything from 14 until now but I am going to highlight that it is possible and I'll just focus on some highlights although, you can easily discover the rest by searching the web anyway:

Having $0 to start with and being 14 years of age, I have to improvise which meant my first venture was forum boosting, and within a few days I was making the equivalent of $XX/day in a domain forum currency - which could be then exchanged for cash or used to purchase hosting/domains etc. It was actually growing fairly rapidly that I ended outsourcing a lot of the work.

From there I built my first website on its own domain and hosting and sold icons on my desktop (this was around the time of MDHP) and displayed the icons with links to the appropriate site. It was profitable and I sold around 6 of them.

After that I ended up creating/selling turnkey sites - banner makers, web directories (this was actually really huge), ebay typo sites etc as well as Custom Content Sites, RSS Mini-Sites and RSS Search Engines (before the likes of Yahoo! Boss).

I participated in a lot of arbitrage including discovering a method how to purchase domains for $x and resell them for $xxx+ - a method which I released for free, and one which still works today.

As well as the launch of an advertising network - when I was 16 which included securing a fairly large advertising deal (well it seemed it at the time!) with a dating site before I even had decided the name for it or wrote a single line of code. I ended up offering some differences to ensure growth including the ability for ads to blend perfectly with gradient backgrounds. The advertising network had a successful outcome, although whilst it is longer in operation on the domain it was on (I actually still own the domain name) the users loved it and all I will say is that they were happy where they ended up.

Since then I’ve been mainly buying/selling domains (using the method I released for free), playing with affiliate marketing and SEO.

---

I’m not even the only one either, I could mention a TON of people including some mentioned by others here and the likes of:

Sam (citricsquid) who with only $40 to his name bought 2 domains for $10 each and turned them into million-dollar websites. [1]

[1] http://news.ycombinator.com/item?id=3932829v

---

Now I don’t know if you can code or not but if you can’t then I suggest you learn or don’t do something too ambitious initially. So keep it simple, learn the basics get to know your way around HTML/CSS and ideally something like PHP as there are a lot of CMS’s available including the likes of Wordpress, Joomla, Drupal etc.

I also don’t know your costs of living etc as well but, that isn't important. In order to be successful with your sideproject you need to ensure that you

build something you are actually interested in

This advice may seem weird/useless advice but as you keep doing small projects/flipping them etc you realise what this actually means.

Yes, you should look for there to be some form of business there but trust me... if you’re not interested in it you are going to give up and dedicate every spare second you have to making it a success and turning it into a full-time income.

I don't care if you end up making a men’s lifestyle blog or a time-tracking app or whatever it is but pick something you are into and always think in the back of your mind “this can become a real business” of course that means it needs to be something you can monetize be it with paid signups and/or advertisements etc.

Now go and find something you’re interested in.

Then look at the market what its currently offering and how you can differentiate from them or improve on them.

Once you’ve done that, build your MVP and grow your successful side project/business!