18 ways to Build Passive Income that work in Australia

Financial Autonomy - Blog
18 ways to Build Passive Income that work in Australia

I’ve been researching all the ways one might go about generating Passive Income. Unfortunately, many of those found on the web won’t work in Australia. So I’ve produced a custom list especially for those of us on the largest island in the Southern Hemisphere.

Here’s what I’ve come up with:

1. Low input business
2. Residential Property Investment
4. Blogging
5. Online course sales
6. Bonds / Fixed Interest
7. Managed Funds / ETF’s
8. Creation of Intellectual Property
9. Licensing
10. Commercial Property investment
11. Private loans
12. Affiliate programs
13. Peer to Peer lending
14. Tik Tok or YouTube channel
15. Sublet surplus space
16. Joint Venture referral programs
17. Sell stock images
18. Become an author on Amazon


If you’re to achieve financial independence and gain the choice in life that is our goal here at Financial Autonomy, then it’s very helpful if some or perhaps all of your living costs can be met without you needing to put a finger to a keyboard, smile at a customer, or drill a hole to install something or other.

Passive Income sources are the key to arriving at this outcome.

It’s important to recognise that in one way or another, passive income generation requires considerable work upfront. For example, our third option – buying shares, produces wonderful passive income via dividends, but of course you’ve had to work and save in the first place in order to have the cash to buy those shares.

Alternatively, for something like a YouTube Channel or an Online Course, you don’t need to have built up a tonne of savings, but you do need to put in considerable work at the outset to create the content.

So Passive Income isn’t free income. But it’s income that can be produced through deliberate thought and planning, for those prepared to step back from the daily grind and chase their dreams.

Let’s explore in more detail the 18 opportunities I’ve identified that will work for us here in Australia:

1. Low input business

Think here of a laundromat, vending machines, or perhaps a do it yourself car wash facility. It could even be running an AirBNB property (here’s a somewhat extreme example to whet your appetite).  The low “input” I’m referring to here is your hours.

These all require an initial investment and some on-going supervision. You may hire people to do some of the grunt work, such as re-filling the vending machines or giving the laundromat a mop.

The trend towards a cashless society helps make these businesses more secure – the removal of cash sitting in machines reduces the temptation for vandalism and theft.

I met a guy who had a great low input business placing classic pinball machines into trendy cafes and work places. He maintained them himself and would rotate machines across venues every few months to keep the interest up. He made a very tidy income and had fun doing it.

2. Residential Property Investment

passive income investment property
An oldy but a goody – become a landlord.

In Australia, borrowings are likely to be required to enter the residential property market, so even at the current super-low interest rates, in the early years the cash flow derived from the rental income will likely be absorbed by loan repayments. But over time this debt will get paid down, and your rental income is likely to creep up, so that down the track your property investment will throw off surplus cash. Hold it long enough and see the debt repaid to enjoy the full benefits of this passive income source.

Being a landlord is not without its headaches. Properties wear out, and tenants don’t always treat your property with the respect that you would hope. There are also ongoing costs like council rates and insurance.

Residential property investment seems particularly well suited to those with some “handyman” skills. I know of residential property investors who have been able to make relatively minor improvements to properties that they bought – perhaps modernising a kitchen, or replacing a rotting pergola, and they’ve increased the value of the property considerably. In the process, they’ve been able to attract better quality tenants, and charge a higher rate of rent.

A little while back I interviewed the author of Flip for Cash- Geoff Grist on how to succeed when buying, renovating and then selling investment properties in Australia. Give it a listen here:


Perhaps the most passive of passive investments – buy your shares and receive your dividends without the need to do anything at all. Unlikely property there is no maintenance to worry about, and no costs like insurance, it’s just buy and forget about.

Share investments are easy to diversify. This means you can reduce your risk and improve the resiliency of your passive income stream. Whether you achieve this via a fund such as an ETF, or simply through buying shares across different companies and industries within your portfolio, the ability to diversify is a key benefit of building passive income through share investment.

You can get started investing in shares with relatively little money. Typically $2,000 is enough to get started (note, this should be money you don’t expect to need for at least 5 years). And unlike property, there is no need to borrow to get into the market.

Shares also have the benefit of being wonderfully liquid – if life throws you a nasty – sell your shares and have the money in your bank account in 3 days. Quite incredible.

We’ve produced a toolkit on getting started with shares that you might find useful. Grab it free here.


4. Blogging

Like writing and comfortable with technology? Maybe blogging is a pathway to passive income that you could pursue. Now how “passive” this one is debatable – certainly there’s a lot of work initially to create content and attract eyeballs to that content, however those that do it successfully can keep the advertising revenue rolling in with relatively minimal hours each week after the initial establishment push. Increasingly blogging is meshing in with email newsletters to overcome the challenge of a traditional blog being that people have to think to go and visit. Instead an email prompts them in their inbox.

When planning your blog, look for a niche – you want to produce content that people will Google and that you stand a chance of ranking on the first page for. That’s hard. You don’t want to be up against major media organisations and publishers. Search for a small community that you can create valuable content for.

A great blog example is gatheringdreams.com . You can see that she makes money via advertising which pops up at the bottom of posts, and affiliate sales (Things I Love page and within posts).

The guys at Income School produce a great YouTube channel that you might find helpful if blogging is something you’re interested in digging into.

In this podcast episode I spoke with blogging expert Sharron Gourley on how she succeeded in making blogging her full-time income earner:

5. Online course sales

Are you an expert in something? Have you done Malcolm Gladwell’s suggested 10,000 hours of practice to become an elite performer? Then perhaps your pathway to passive income is to create an online course.

Online courses are a fantastic way to gain knowledge quickly. They’re like hitting the fast forward button. Sure, you could Google and YouTube away and you’d probably figure it out in time (lots of time!). Or you could pay a few hundred dollars and have the key information that you need laid out in a logical sequence, easily digestible and actionable. Plus you avoid the myriad of missteps.

Platforms like Teachable, Kajabi, and Udemy make course publication simple.

6. Bonds / Fixed Interest

Passive Income - bonds
Not the sexiest of passive income stream generation options, but as with share investment, one that is very passive indeed. It also has the benefit of offering high levels of capital security for those who are risk-averse.

At the simplest and most accessible level is bank term deposits. Here, you put your surplus cash in for a fixed term, usually from 3 months to several years. Your money is not accessible during this period, and for forgoing access to your savings, you are rewarded with an interest payment more generous than what you would receive on your normal transactional bank account.

Bonds are an institutional version, typically for time periods of years rather than months. Minimum investments are high, so most of us can’t invest in bonds directly. However, we can invest in Bond funds with ETF’s and Managed Funds.

It’s important to be aware however that the value of your investment in a bond fund will rise and fall as global interest rate changes affect the value of bonds held within the portfolio. Whilst the volatility is typically less than a share fund, the very fact that it exists is a key point of difference compared to a term deposit, where you have certainty that what you put in, is exactly what you will be able to get outcome maturity.

7. Managed Funds / ETF’s

Passive income doesn’t come much easier than via ETF’s and Managed Funds. Place your money in these funds, and aside from a little bit of paperwork, you have nothing to do but spend your distributions, which come either quarterly or six-monthly.

Managed Funds and ETF’s cover a range of assets, from shares to property, and bonds. They can focus on Australian assets, or those overseas. They can also focus on certain economic sectors, or invest according to a theme, such as ethical investment.

You can also get funds that have a mixture of assets. Your superannuation account probably has this type of fund – Balanced, Growth etc. They allow you to adjust the level of risk carried by your investment, to align with your comfort level and investment time frame.

Managed Funds and ETF’s come at a cost – clearly, the fund manager isn’t working for free. So before you invest, make sure you understand the costs. If in doubt, seek out professional advice.

8. Creation of Intellectual Property

From Guns and Roses to JK Rowling to the Beatles – creating a piece of work and then selling it to the masses has been a pathway to passive income which can in the case of extreme success prove incredibly lucrative.

Back in episode 81 Joanna Penn explained how she reinvented herself from a business consultant to an author of both fiction and non-fiction books, and now generates a multi six-figure income from the work she has created.

Intellectual property (IP) can take a range of forms – writing, music, design, inventions, or software are all examples.

The digitisation of the world has meant that the ability to convert these IP assets into money has exploded.

Platforms like Kickstarter, and Amazon Kindle Direct also help solve the challenge of getting your creation out to market.

Intellectual Property as a form of passive income is definitely a viable path to passive income. As with many of these opportunities, it requires work upfront, but the long term pay off can be significant.

My book, Financial Autonomy – the money book that gives you choice, is my primary foray into the world of passive income via Intellectual Property. The process of writing a book was fantastic, and if you’ve ever thought about getting your ideas out in the world, I certainly encourage you to give it a go. If finding a publisher is too daunting, Amazon make it quite easy to self publish your own ebook, so many of the old barriers to entry have been removed.


Download the first chapter of Financial Autonomy – the money book that gives you choice free here

9. Licensing

Licensing is renting out your idea to a company who will take care of production and marketing. It’s a great way to get your ideas to market quickly, with minimal capital outlay and minimal risk. It also suits people with a creative skill set, who don’t fancy the idea of running a business.

Licensing works for the businesses involved because they can save on R&D – let people tinker away in their shed or on their computer, and if it comes to naught, the company has lost nothing.

Royalty rates are typically 3%-10% of wholesale sales.

The definitive book on licensing is One Simple Idea by Stephen Key.


10. Commercial Property investment

When most of us think property investment, we think about residential property. Yet the commercial property sector is a viable alternative that can offer many benefits for those seeking passive income.

The primary positive element of commercial property is that all costs and maintenance are borne by the tenant. Unlike a residential property, with a commercial property you have no obligation to replace the dishwasher or give the place a paint.

Banks typically require a larger deposit when buying commercial property, so you need to have meaningful savings available to be deployed to step into this space. The upside to this requirement however is that commercial properties tend to become cash flow positive relatively quickly, with most lease agreements building in an annual increase, typically somewhere around CPI.

The major negative with commercial property investment is that when a tenant leaves, it can take considerable time to find a new one. You need to hold sufficient cash reserves to be able to weather this challenge. The flip side though is that once you have a good tenant, they often stay for a long time. For some businesses, their goodwill becomes linked to their physical location – this is especially the case for the likes of cafes or restaurants. Commercial property also often involves expensive set-ups, and so once a tenant has made that investment, they prefer to stay put.

Lease terms are typically 5 years plus, so provided you have a quality tenant who pays on time, they can be a very reliable source of cash flow.

COVID has had a big impact on the Commercial Property market. CBD office space is a dime a dozen, whereas warehouse space suitable as a base for online deliveries is in big demand.

11. Private loans

Passive Income Australia - private loan
Passive Income Australia

Often accessed via solicitors, these are loans typically to property developers. They are usually for terms of 12 – 24 months, often with some sort of mortgage security provided. Returns are higher than bank interest, but then the risk is clearly higher too. They tend to be the preserve of wealthy investors but they could be worth exploring if you have meaningful cash available.

A solicitor I spoke to whose firm dealt with a lot of these advised that he’d not seen a loan where the principal wasn’t paid back (which certainly doesn’t mean it never happens), but he’s seen plenty where the loan time frame gets stretched out as the project doesn’t go exactly to schedule, and some instances where lenders had to accept a lower interest payout at the end of term because things didn’t quite work out as planned.

So something you could explore – just ensure you are adequately compensated for the risk, and ideally, try to diversify across several borrowers.

12. Affiliate programs

I’m sure you’ve seen plenty of examples of affiliate marketing around the web.

When a podcast host asks you to go to www.buythistuff.com/thispodcast for 10% off the standard price – that’s affiliate marketing – they will earn a commission from every sale made.

Similarly, on most blogs there will be links to books that you can buy on Amazon or a software product that you can subscribe to. These are all viable ways that someone with a degree of publishing flair can build a passive income stream.

Affiliate programs can be a great solution for all involved. The content creator builds a following in a particular niche. They build up trust, so in most cases, they won’t want to promote a product that is rubbish. They become gatekeepers. Their audience understands this and has trust in the creator. So they’re directed towards products and services with a high likelihood of being relevant to them and of good quality. And the producer of the product gets to put their wares in front of a highly targeted audience.

Affilorama suggests these 7 steps to make your first affiliate marketing sales:
1) Choose a niche
2) Research different affiliate programs and products
3) Build a site
4) Produce excellent content
5) Build an audience
6) Promote your affiliate products
7) Repeat steps 4-7 on a continual basis
Check out this interview I did with Nick Loper of The Side Hustle Show on the Characteristics of a Successful Side Hustle.

13. Peer to Peer lending

Cutting out the middle man – that’s peer to peer lending in a nut shell. It’s not huge in Australia, but perhaps low bank deposit interest rates might drive growth. ASIC reported that $300million in loans were provided via peer to peer lending in the 2018/19 financial year.

Various peer to peer lenders provide facilities to match those with surplus cash with borrowers. Loans may be for commercial or personal purposes.
Often the platforms will allow you as the investor to fund small portions of several loans, so that you can spread your risk.

As an investor, peer to peer lending certainly has the potential to generate a passive income stream, providing monthly cash flow as your loans are repaid. You’d just want to be sure that the return you are being paid appropriately reflects the risk you are taking on. You’d also want to be confident that the funds you are lending to someone won’t be needed in the short term. If you lent your money to someone for a 5 year term, you can’t turn around a year later, change your mind, and want your money back.

Moneysmart has a good post on peer to peer lending that would be worth a read if this is an area you’d like to explore further.

14. Tik Tok or YouTube channel

Passive income Youtube
Who would have thought 20 years ago that it would be possible to create your own TV program, have it viewable by billions of people, and get paid, sometimes handsomely?

Swedish gamer PewDiePie is estimated by Forbes to have earned USD15million in 2018, whilst Ryan’s Toy Review – a channel where 8 year old Ryan and his siblings review toys, made USD22million in the same year.


If you’ve got a talent for video production, a YouTube or TikTok channel could be your path to passive income. There’s a great blog post here packed with YouTube content ideas that might help you get started.

15. Sublet surplus space

Here at my financial planning business, we have a spare office. I sub-let it to John, a Fire Engineer. It’s a great outcome for all concerned. I get some extra cash, John gets a comfortable work environment outside of his home, and everyone in the office benefits from improved social engagement and diversity.

I similarly sub-let a surplus car space that I have.

I had a client whose business traded from a warehouse and he sub-let some spare space to a friend so he could store his caravan.


16. Joint Venture referral programs

This is really an old school version of affiliate programs.

Plenty of businesses pay a referral or spotters fee to people who can introduce new clients.

Examples I’ve seen are consultants who earn commissions for introducing a cashed-up buyer to a business owner looking to sell, accountants who get a cut of revenue generated when they refer a client to a mortgage broker or financial planner, or those promoting real estate who receive a commission payment from the developer.

Typically they come about where a specialist in one field has customers that often need a service that the specialist doesn’t provide. To provide a smooth and comprehensive solution for their clients, they form joint ventures with other complementary service providers they trust, and agree to a revenue sharing arrangement.

If you operate a business, what products or services do your customers commonly need? Could you reach out to a provider of those services and explore co-operating to produce a win win outcome for you both?

17. Sell stock images

According to Jim Harmer of Improve Photography, stock photos earn between 25-45 cents per image per month. At that rate, you’ll need a lot of images loaded up to make anything like a meaningful amount of money. But the nice aspect is that if photography is your thing, you can load up images you’re already sitting on – they’re just taking up room on your hard drive. And once loaded up you have nothing more to do – genuine passive income.

I’ve seen some reference to stock video being a growing area, so that might be worth exploring too.

Maybe this one just covers your gym membership for the month – nothing wrong with that.

Check out iStock, Shutter Stock, Adobe Stock.

You might find our 1 Page Side Hustle Business Plan useful.


18. Become an author on Amazon

Amazon’s scale is amazing, and with Kindle Direct Publishing, becoming a published author is now within all of our reach. Build up a following, promote your book on the platform, and make money pursuing your writing passion. What an incredible time we live in!




Over to you now – which Passive Income strategy will you pursue?



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