Property Cash Flow Calculator

How to Use the Investment Property Cash Flow Calculator

This property cash flow calculator shows how much an investment property puts in your pocket, or takes out of it, each week, month and year. Enter the price, the weekly rent and your costs, then add your loan (interest-only or principal & interest). To see an after-tax result, open the tax section and add your taxable salary and any depreciation. A 10-year projection shows how rent growth can change the picture over time.

The Cash Flow Formula

Worked Example

A property bought for $650,000 rents for $600 a week, or $31,200 a year. With 2 weeks of vacancy, $30,000 of rent is collected. Expenses total $11,400: a 7% management fee ($2,100), a one-week letting fee ($600) and running costs of $8,700 (council rates $2,200, water $800, strata $3,000, insurance $1,500 and maintenance $1,200), an expense ratio of 38.0% of rent collected. That is a gross yield of 4.80% and a net yield of 2.86% before any loan.

With a $520,000 principal & interest loan at 6.2% over 30 years, repayments are $3,185 a month ($38,218 a year): $32,067 of interest and $6,151 of principal in year 1. Pre-tax cash flow is −$19,618 a year (−$1,635 a month, −$377 a week). On a $110,000 salary with $5,000 of depreciation, the taxable rental result is −$18,467, which saves about $5,909 in tax, so the after-tax cash flow is −$13,709 a year (−$264 a week).

On an interest-only loan, repayments are $32,240 a year and pre-tax cash flow improves to −$13,640 a year (−$262 a week), but none of the loan is repaid. With the same assumptions and 3% rent growth, the P&I version is still negative in year 10 (−$13,949), by which time the property is worth about $962,159 at 4% growth and the loan balance is $437,468, leaving $524,691 of equity.

Positive vs Negative Cash Flow

Positive cash flow means the rent covers everything and the property funds itself. Negative cash flow means you top it up from your own income, which is sometimes called negative gearing when the loss is claimed against other income. A tax refund softens the loss but never turns it into a gain: in the example above, you still pay $13,709 a year after tax. Negative cash flow only makes sense if you can afford the top-up comfortably and you have good reason to expect capital growth.

Interest-Only vs Principal & Interest

Principal isn't an expense, because you still own the money as equity in the property, but it is cash that leaves your account every month. An interest-only loan removes that principal portion for the interest-only period, which improves cash flow, but the balance doesn't fall and repayments typically rise when the loan reverts to principal & interest. Compare both in the calculator and look at the equity column in the projection, not just the weekly figure.

Why Cash Flow Isn't Taxable Profit

Cash flow counts the money that actually moves. Taxable profit counts what the tax system allows. Depreciation reduces taxable income without costing you cash, and principal repayments cost you cash without being deductible. The calculator shows both numbers so you can see that a $5,000 depreciation deduction improves your tax position but not your bank balance.

Typical Rental Property Costs

• Property management fee (a percentage of rent collected) and letting fees for each new tenancy
• Council rates and water rates (including usage if the tenant doesn't pay it)
• Strata or body corporate levies for units and townhouses
• Landlord insurance, which is separate from building and contents cover
• Repairs and maintenance, including an allowance for big-ticket items
• Land tax, if the land value is above your state's threshold
• Vacancy, the weeks the property is empty between tenants
• Loan interest and fees, shown separately from operating costs

How to Improve Cash Flow, and Keeping a Buffer

Cash flow improves with higher rent, shorter vacancies, cheaper management and insurance, a lower interest rate and a larger deposit. Whatever the result, hold a cash buffer for vacancies, repairs and rate rises. Rates and costs rise over time, so test the numbers with a higher interest rate and a few extra weeks of vacancy before you commit.

Cash Flow vs Rental Yield

Yield measures the property: rent against price, with or without costs. Cash flow measures your whole position once the loan is included. A high-yielding property with a large loan can still have negative cash flow, and a low-yielding one with a small loan can be positive. Look at both numbers, and check the net yield figure above against the loan interest rate to see whether borrowing is working for or against you.

Frequently Asked Questions

How do I use an investment property cash flow calculator?

Enter the purchase price, weekly rent, vacancy, management fee, yearly running costs and your loan details. The calculator works out rent collected, takes off every expense and your loan repayments, and shows what is left (or what you need to top up) per week, month and year. Add your taxable salary and depreciation to see the after-tax result too.

What is the cash flow formula for a rental property?

Cash flow = rent collected − operating expenses − loan repayments. Rent collected is the weekly rent times the weeks the property is actually let, and loan repayments include both interest and principal. A positive result means the property pays for itself, and a negative result means you fund the gap from your own income.

What is the difference between positive and negative cash flow?

A property is cash flow positive when rent covers every expense and the loan repayments with money left over, and cash flow negative when it doesn't. Negative cash flow isn't automatically bad, since some investors accept it while aiming for capital growth, but it needs a buffer in your budget and it is a real cost every week even after any tax refund.

Is principal an expense when I calculate rental cash flow?

Principal repayments are not an expense and aren't tax deductible, but they are real cash leaving your account, so they reduce cash flow. That's why a principal & interest loan usually shows weaker cash flow than interest-only on the same property, even though the principal you repay builds your equity. Switch the loan type in the calculator to see the difference.

Why isn't my cash flow the same as my taxable profit or loss?

Two items differ. Depreciation is deductible for tax but isn't cash you spend, which makes the taxable result lower than cash flow. Principal repayments are cash you spend but aren't deductible, which makes it higher. This calculator shows both the pre-tax cash flow and a separate taxable rental result before working out the tax effect.

What costs should a rental property costs calculator include?

Typical annual costs are council rates, water rates, strata or body corporate fees, landlord insurance, repairs and maintenance, land tax where it applies, the property manager's fee (often a percentage of rent collected), letting fees for new tenancies and an allowance for vacancy. Loan interest is separate. Include an 'other' amount for things like pest control, smoke alarm checks or accounting fees.

How much buffer should I keep for vacancies and repairs?

There's no official figure, but most investors keep several months of total costs and loan repayments in an offset or savings account in addition to the vacancy and maintenance allowances in their budget. A hot water system, a burst pipe or a month between tenants can arrive at any time, and the buffer stops those events from becoming a forced sale.

How can I improve the cash flow on my investment property?

The main levers are increasing rent, cutting vacancy, comparing property managers and insurers, claiming depreciation, reducing your interest rate by refinancing, and choosing an interest-only period or making a bigger deposit. Try each one in the calculator before acting, because improving cash flow by taking on a higher rate or lower-quality property can cost you more elsewhere.

What is the difference between cash flow and rental yield?

Rental yield compares the property's rent (and, for net yield, its running costs) with its price and ignores the loan. Cash flow includes your loan repayments, so the same property can have an acceptable yield but negative cash flow if you borrow heavily. Use yield to compare properties and cash flow to see whether you can afford to hold one.

Does the calculator work for real estate cash flow outside Australia?

The calculator is built around Australian conventions: weekly rent, a 52-week year and 2026-27 Australian resident tax rates including Medicare. The cash flow section works with any currency if you use consistent figures, but the tax effect only applies to Australian residents. Leave the salary blank to skip tax.