Cash Flow Calculator

Cash flow is the money left over after you collect rent and pay every bill associated with the property. It is the simplest and most honest measure of how your investment is performing month to month. If you have money left over, you are cash-flow positive. If you are paying out more than you receive, you are cash-flow negative.

The calculation itself is not complicated: total rental income minus total expenses equals cash flow. But most landlords underestimate the expense side because they only think about the mortgage. In reality, your outgoings include council rates, water rates, insurance, maintenance, vacancy periods, strata levies (if applicable), land tax, and potentially property management fees. All of these eat into what the property earns.

It is worth understanding the difference between cash flow and profit. Cash flow is the actual money moving in and out of your bank account right now. Profit, in accounting terms, can include non-cash items like depreciation deductions that reduce your taxable income without requiring you to spend anything. A property can be cash-flow negative but still show a net profit on paper once depreciation is factored in. Your accountant cares about both numbers, but your household budget only feels the cash flow.

If you are not sure what your property actually costs you each year, our breakdown of the cost of owning a rental property in Australia covers every line item you should be tracking.

Getting an accurate cash flow figure means accounting for every dollar that leaves your pocket, not just the big ones. Here is what belongs in the calculation:

• Mortgage repayments. This is usually the largest single cost. Note that the full repayment counts for cash flow purposes, including principal. Even though only the interest portion is tax-deductible, the principal repayment still comes out of your bank account each month.
• Council rates. Billed quarterly by your local council, typically $1,200 to $2,500 per year in capital cities.
• Water rates. The fixed service charge is yours to pay. Usage charges are generally passed on to the tenant.
• Insurance. Building insurance is essential. Landlord insurance is strongly recommended on top of that. Budget $1,200 to $2,500 combined per year.
• Property management fees. If you use a property manager, expect 5% to 10% of rental income plus letting fees. If you self-manage, this drops to zero, but you are trading money for time.
• Strata or body corporate levies. For units and townhouses, strata levies can range from $500 to $5,000+ per quarter depending on the building and its amenities.
• Maintenance and repairs. A common rule of thumb is 1% to 2% of the property's value per year. In practice, costs arrive unevenly. One year you might spend almost nothing, the next you are replacing a hot water system for $2,000.
• Vacancy allowance. No property is rented 52 weeks a year, every year. Even one week of vacancy on a $550/week property costs you $550. Most investors budget a 2% to 4% vacancy rate.
• Land tax. Varies by state and depends on your total landholdings. Some landlords pay nothing if they fall below the threshold. Others pay thousands. Use our land tax calculator to check.

Missing even one of these line items will make your cash flow look better than it really is. The goal is an honest number, not an optimistic one.

A positively geared property puts money in your pocket each month after every expense is paid. It is the simpler outcome to understand: rent exceeds costs, and the surplus is yours (minus the tax you owe on it as income).

A negatively geared property costs you money each month. Your expenses exceed the rent, and you cover the shortfall from your salary or savings. For many Australian landlords, particularly those in the early years of ownership with high mortgage interest costs, this is the reality.

Negative cash flow is not automatically a bad outcome. Under Australia's negative gearing rules, the rental loss can be offset against your other taxable income, reducing the tax you pay on your salary. If you earn $110,000 from your job and your rental property runs at a $6,000 loss, you are taxed on $104,000 instead. At the 37% marginal rate, that saves you roughly $2,220 in tax. You are still $3,780 out of pocket in real terms, but the tax system softens the blow.

The catch is that negative gearing only works as a long-term strategy if the property's capital growth outweighs the accumulated cash losses by the time you sell. A property that costs you $5,000 a year after tax for ten years needs to have grown by more than $50,000 just to break even, before you even account for capital gains tax on the sale.

Neither outcome is inherently right or wrong. What matters is that you know which one you are in, and that the number is based on real figures rather than assumptions. That is what a proper cash flow calculation gives you.

Let's work through a realistic example using a three-bedroom house in Brisbane purchased for $650,000 with an 80% loan.

Income:

• Weekly rent: $550
• Annual rent (assuming 2% vacancy): $550 x 52 x 0.98 = $28,028

Annual expenses:

• Mortgage repayments (interest-only on $520,000 at 6.2%): $32,240
• Council rates: $1,800
• Water rates (fixed charges): $1,000
• Building and landlord insurance: $1,800
• Maintenance allowance: $3,000
• Land tax (QLD, assuming no other properties): $0 (below threshold)
• Total expenses: $39,840

Net cash flow: $28,028 - $39,840 = -$11,812 per year

That is roughly -$985 per month, or -$227 per week, coming out of your pocket. The property is negatively geared.

Now, the tax offset. If the owner earns $105,000 from their day job and has a marginal tax rate of 37%, the $11,812 rental loss reduces their taxable income and saves them roughly $4,370 in tax. The after-tax cash cost drops to about $7,442 per year, or around $143 per week.

Add in depreciation deductions on the building and fixtures, and the taxable loss grows further, improving the after-tax position without any extra spending. On a property built in the last 20 years, depreciation could add $5,000 to $10,000 in additional deductions.

These are the kinds of numbers that determine whether a property is genuinely working for you or quietly draining your finances. Use the calculator above to run your own figures.

If your property is running at a loss, there are a handful of practical levers you can pull to close the gap. Some are quick, others take time.

Review your rent. If you have not increased rent in 12 to 24 months, check what comparable properties in your suburb are achieving. Our guide to setting the right rent price walks through the research process. Even a modest increase of $20 per week adds $1,040 per year to your income. For more on timing and legal requirements, see our guide on when to raise the rent.

Reduce management costs. If you are paying a property manager 7% to 10% of rent plus letting fees, consider whether self-managing could save you $2,000 to $3,000 a year. It is not for everyone, but for a landlord with one or two local properties, it is manageable. Use our savings calculator to see the difference.

Refinance your loan. Interest rates vary between lenders, and a 0.3% difference on a $500,000 loan saves you $1,500 a year. Talk to a mortgage broker about whether your current rate is competitive. If you are on a variable rate and rates have come down, check that your lender has passed on the full reduction.

Switch from interest-only to principal and interest. This sounds counterintuitive because P&I repayments are higher. But once your interest-only period expires (typically after five years), you will be moved to P&I anyway. Planning for it means you can budget properly rather than being caught off guard by a sudden jump in repayments.

Claim every deduction you are entitled to. Many landlords miss legitimate tax deductions simply because they did not keep the receipt or did not know the expense was claimable. Depreciation is the biggest one. Others include borrowing costs, pest inspections, and even the cost of a depreciation schedule. Every dollar you claim reduces your out-of-pocket cost.

Reduce vacancy. The cheapest way to improve cash flow is to keep your property occupied. Look after your tenants, respond to maintenance quickly, and keep the property in good condition. A good long-term tenant saves you thousands in turnover costs.