Cashflow (positive and negative)

Cashflow is the money left over from rental income after every cost has been paid, including mortgage repayments. A property is cashflow positive when rent exceeds all outgoings, and cashflow negative when the owner must contribute from other income to hold it.

Why it matters more than yield

Yield describes the property. Cashflow describes your bank account. Two investors can buy identical properties and have completely different cashflow depending on deposit size, interest rate and loan structure.

Cashflow determines whether you can hold the property through a downturn, and how quickly you can buy the next one.

Worked example

$479,000 property, $590/week rent, 30% deposit, $335,300 loan at 5.8% interest-only.

Annual rent $30,680 Less operating expenses $10,334 Less interest $19,447 \= \+$899 a year

Marginally positive. A 1% rate rise adds roughly $3,350 of annual interest and tips it to about −$2,450. That sensitivity is the whole game.

Common misunderstanding

Cashflow positive is not the same as profitable, and cashflow negative is not the same as a bad investment. A negatively geared property in a strong growth area may outperform a positive-cashflow property in a static one. The question is whether you can afford to hold it and whether the trade-off is deliberate.

Note also that principal repayments are cashflow but not a tax deduction, so your taxable position and your cash position differ.

Related terms

Last reviewed: 1 August 2026 · ---

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