How to calculate whether an investment property will be cash-flow positive

Collected rent, minus operating costs, minus the loan payment you will make. If the remainder is below zero, the property needs other income.

Collected rent is not advertised weekly rent × 52 unless you can defend 52 paid weeks. Operating costs are the itemised list on the yield page: rates, water, insurance, management, maintenance, strata, land tax where it applies. The loan payment is interest, plus principal if the product requires it.

Tax sits after this line. From the 2027-28 income year, excess deductions on many established residential investments acquired after 12 May 2026 cannot simply reduce salary. Do not “fix” a deficit by assuming a refund. See negative gearing after 2026.

1. Annual collected rent: weekly rent × paid weeks.
2. Minus operating costs you can source.
3. Minus interest for the year.
4. Minus principal if the loan is principal-and-interest, or after an interest-only period ends.
5. Equals pre-tax cash flow. Unknown cost: leave unknown, do not zero it.

Enter price, weekly rent, opex as a percentage of price, mortgage rate and LVR. The calculator returns gross yield, net yield, annual interest-only cash flow, and DSCR. DSCR is net operating income divided by interest. Below 1.00, the interest line is larger than rent after opex.

It does not subtract principal. It does not subtract vacancy unless you lower the weekly rent. It does not add a tax benefit. Use it as the interest-only base case, then adjust on paper for the product you were actually offered.

Moneysmart notes that during an interest-only period you pay nothing off the principal, and that repayments rise when the period ends. A property that is cash-flow positive on interest-only can be negative the day principal starts. If the proposed loan has a five-year interest-only term, do not treat a ten-year interest-only worksheet as your year-six cash flow. See interest-only versus principal-and-interest.

• Using advertised rent × 52 as collected rent.
• Skipping land tax because the home you live in is exempt. Land tax thresholds and rates differ by state and territory.
• Treating a one-year interest-only surplus as the holding-period result.
• Adding a generic tax refund to close a gap.
• Calling DSCR above 1 “safe” without a vacancy or rate-rise test.

The calculator caption states that cash flow subtracts interest-only interest on price × LVR, and that tax, vacancies and principal are not included. On a property page, net yield stays unknown unless holding-cost inputs exist for that jurisdiction. Districts does not mark a property cash-flow positive or negative as a verdict.

A surplus does not establish that the rent is achievable, that the building will not need a special levy, or that the purchase suits you. It does not establish after-tax position. It does not approve a loan. The lot still needs the investor checklist.

Replace every input with a source: rent from comparable leases, opex from notices and quotes, rate and LVR from a lender, vacancy from recent time-to-let. Re-run at plus 2 percentage points on the rate. If the loan is interest-only, also write the principal-and-interest payment the lender quotes for the day the period ends. Then decide whether the household can fund a negative year. That is affordability, not borrowing capacity.