Cash flow
The money left over, or the shortfall, after a property's rent is received and all its costs, including loan repayments, are paid.
- Positive: the property pays for itself and more
- Negative: you top it up from your income
- Includes loan repayments, unlike net yield
How it works
Add up the rent, then subtract repayments, rates, insurance, strata, management, maintenance and land tax. Tax effects can be shown before or after tax.
Why it matters
Cash flow decides how many properties you can hold comfortably, and lenders look at it when you apply for the next loan.
Test cash flow at higher interest rates and with a few weeks of vacancy. A plan that only works in good conditions is not a plan.
Common questions
Is negative cash flow always bad?
Not if it is planned and affordable, but it limits how far you can expand.
How can I improve cash flow?
Higher rent, lower costs, a larger deposit or different loan structure. Ask your broker and accountant.
Related terms
Sources
General information only. It does not consider your objectives, financial situation or needs, and is not financial, credit, tax or legal advice. Rules change, so check current law and get advice from a licensed professional before acting.