Positive Cash Flow Properties in Australia: How to Find and Assess Them

Positive cash flow properties are the holy grail for many Australian property investors — properties where the rental income exceeds all ownership expenses, putting money in your pocket every week rather than draining it. While most investment properties in capital cities are negatively geared (costing the investor money each week, offset by tax deductions), positive cash flow opportunities do exist if you know where to look and how to structure your investment.

This guide explains exactly what positive cash flow means, how to calculate it, where to find these properties in Australia, the trade-offs involved, and strategies to improve the cash flow on any investment property.

What Is a Positive Cash Flow Property?

A positive cash flow property generates more rental income than it costs to own. The key word is "all costs" — not just the mortgage repayment, but every expense associated with holding the property. A property is positively geared when:

Annual Rental Income > Annual Mortgage Repayments + All Ownership Costs

Ownership costs include:

• Mortgage repayments (principal and interest, or interest-only)
• Council rates
• Water rates and charges
• Landlord insurance
• Property management fees (typically 7-10% of rent)
• Maintenance and repairs allowance (typically 1-2% of property value per year)
• Strata/body corporate levies (for units and townhouses)
• Land tax (varies by state, may not apply below threshold)
• Vacancy allowance (typically 2-4 weeks per year)

How to Calculate Cash Flow: A Worked Example

Let's work through a real-world example using a $400,000 house in regional Queensland renting for $450 per week:

Annual Income

• Weekly rent: $450
• Annual gross rent: $450 x 52 = $23,400
• Less vacancy allowance (3 weeks): -$1,350
• Effective annual income: $22,050

Annual Expenses

• Mortgage repayments (interest-only at 5.5% on $320,000 loan — 80% LVR): $17,600
• Council rates: $2,200
• Water rates: $1,100
• Insurance: $1,800
• Property management (8% of gross rent): $1,872
• Maintenance allowance: $2,000
• Land tax: $0 (below threshold in QLD)
• Total annual expenses: $26,572

Cash Flow Result

$22,050 - $26,572 = -$4,522 per year (-$87 per week)

Even with a relatively high yield of 5.85% gross, this property is slightly negatively geared at 80% LVR on interest-only repayments. This illustrates why true positive cash flow properties are uncommon with standard financing. However, adjusting the deposit size changes the picture dramatically — see the strategies section below.

Now let's recalculate with a larger deposit of 40% ($160,000 deposit, $240,000 loan):

• Mortgage repayments (interest-only at 5.5% on $240,000): $13,200
• All other expenses unchanged: $8,972
• Total expenses: $22,172
• Cash flow: $22,050 - $22,172 = -$122 per year

With a 40% deposit, this property is essentially cash flow neutral. Add one more rent increase of $10 per week and it becomes positively geared. This demonstrates how deposit size is the single biggest lever for cash flow.

Where to Find Positive Cash Flow Properties

Positive cash flow properties are most commonly found in areas with high rental yields relative to property prices. In Australia, this typically means:

• Regional Queensland: Towns like Townsville, Rockhampton, Gladstone, and Mount Isa offer gross yields of 6-10%, making positive cash flow achievable with moderate deposits.
• Regional South Australia: Adelaide's northern suburbs (Elizabeth, Salisbury, Davoren Park) and regional towns like Mount Gambier offer yields of 5.5-7%.
• Regional Western Australia: Mining towns like Kalgoorlie and Karratha offer very high yields, though with significant volatility risk. Perth's outer suburbs also offer reasonable yields with more stability.
• Regional NSW: Towns like Broken Hill, Dubbo, and Orange offer yields of 5-8%, though population growth varies significantly between locations.
• Tasmania: The north-west coast (Burnie, Devonport) offers affordable entry points and yields of 5-6.5%.

For a detailed breakdown of high-yield suburbs across every state, see our guide to the best rental yield suburbs in 2026.

The Trade-Off with Capital Growth

The most important trade-off to understand is that positive cash flow properties typically deliver lower capital growth. Australian property wealth is overwhelmingly built through capital growth rather than rental income. Consider this comparison over 10 years:

• Property A (positive cash flow): $400,000 purchase, +$50/week cash flow, 2% annual growth. After 10 years: $487,000 value, plus $26,000 net cash flow = $113,000 total gain.
• Property B (negatively geared): $700,000 purchase, -$100/week cash flow, 6% annual growth. After 10 years: $1,253,000 value, minus $52,000 net cost = $501,000 total gain.

Property B delivers nearly five times the total return despite costing the investor money each week. This is why most sophisticated investors prioritise growth over yield — the cash flow difference is dwarfed by the capital growth difference over time.

However, positive cash flow properties have their place. They are ideal for investors who:

• Cannot afford to subsidise a negatively geared property
• Want to build a portfolio of multiple properties (cash flow from existing properties funds the next purchase)
• Are approaching retirement and need income rather than growth
• Want reduced financial risk and stress from holding costs

Tax Implications

Cash flow and tax are closely intertwined in property investing. Understanding the tax treatment is essential:

• Positive cash flow is taxable: Net rental income (after all deductible expenses) is added to your taxable income and taxed at your marginal rate. If you earn $100,000 from employment and $5,000 net rental income, you pay tax on $105,000.
• Negative gearing offsets income: If your rental property makes a loss, that loss reduces your taxable income. A $5,000 net rental loss on a $100,000 salary means you are taxed on $95,000. For a taxpayer on the 37% marginal rate, this saves $1,850 in tax. For a comprehensive explanation, see our guide to negative gearing.
• Depreciation can create paper losses: Even a cash-flow-positive property may be negatively geared for tax purposes once depreciation deductions are included. A quantity surveyor's depreciation schedule can unlock significant tax deductions on newer properties.
• Capital gains tax on sale: When you eventually sell, capital gains tax applies to the profit (with a 50% discount for properties held longer than 12 months for individual investors). Understand the full implications with our capital gains tax guide.

Strategies to Improve Cash Flow

Whether you are buying a new investment or improving the cash flow on an existing property, these strategies can shift the numbers in your favour:

1. Increase your deposit: The most powerful lever. Every additional $10,000 of deposit reduces your loan and repayments. Moving from 80% to 60% LVR can swing a property from negatively to positively geared.
2. Use interest-only repayments: Interest-only loans have lower monthly repayments than principal-and-interest loans (typically 20-25% lower). This improves cash flow in the short term, though you are not paying down the loan balance. Most lenders offer interest-only periods of 1-5 years for investment loans.
3. Increase rent: Review your rent annually against comparable properties. If your property is under-rented, a market-rate adjustment can significantly improve yield. Small improvements (new paint, updated fixtures, better landscaping) can justify higher rents.
4. Reduce management costs: If you have the time and inclination, self-managing your property saves 7-10% of gross rent. For a $500/week property, that is $1,820-$2,600 per year.
5. Shop your insurance: Landlord insurance premiums vary significantly between providers. Getting multiple quotes each year can save hundreds of dollars.
6. Refinance to a lower rate: If you have not reviewed your mortgage rate recently, you may be paying more than necessary. Even a 0.25% rate reduction on a $400,000 loan saves $1,000 per year.
7. Add value to increase rent: Renovations that increase the property's rental appeal — a second bathroom, carport, air conditioning, or granny flat — can boost rental income beyond the cost of the improvement.
8. Consider a granny flat or dual occupancy: In states where regulations permit, adding a granny flat to a house can generate a second rental income stream from a single property, often achieving combined yields of 7-9%.

Key Takeaway

For a complete framework for building a property investment portfolio, see our property investing guide.

Note: The calculations and examples in this article use simplified figures for illustration. Actual cash flow depends on your specific purchase price, loan terms, interest rate, rental income, and expenses. This is general information, not personal financial or tax advice. Always consult a qualified financial adviser and tax professional before making investment decisions.