Cash Flow
Returns & Analysis
The net amount of money moving in and out of your property investment after all income and expenses.
Full Explanation
Positive cash flow means your rental income exceeds all expenses including loan repayments, management fees, insurance, rates, and maintenance. Negative cash flow means you are out of pocket each period. Cash flow analysis should include the tax refund from negative gearing, as this can turn a pre-tax negative cash flow into an after-tax neutral or positive position.
Example
Your property earns $2,200/month in rent but costs $2,600/month in total expenses, resulting in negative cash flow of $400/month before tax benefits.
Frequently Asked Questions
How do I calculate cash flow for an investment property?
Add up all annual income (rent, tax refunds) and subtract all expenses (loan repayments, management fees, insurance, rates, maintenance, strata, land tax). Divide by 12 for a monthly figure. Include vacancy allowance of 2 to 4 weeks per year.
What is after-tax cash flow?
After-tax cash flow factors in the tax refund you receive from claiming deductions and depreciation. A property that is $5,000 per year negative before tax might only be $2,000 negative after the tax refund.