6 ways to manage your cashflow when investing in property

Published on June 15th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.
Manage cash flow while investing

At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.

When it comes to investing in property the number one goal for any investor is to get a return on their investment. Nothing can cut your pockets deeper than poor cashflow management to ensure that your investment is for a long term. These are 6 handy ways in which you can manage your cash flow when investing in property.

1. Not crunching the numbers

Numbers, numbers, and more numbers are something that investors have to constantly keep tabs on to see how their investment will be performing or is performing. Be careful not to fall into the common trap of miscalculating your cash flow. This means not only looking at whether you will be able to meet the occupancy costs for the year but looking at things such as the maintenance or insurance costs that come with maintaining your property. Miscalculating these funds can result in you having to extend your cash flow into sums that could create financial stress. The worst case scenario is that you will have to sell under pressure, which can also lead to a loss for you.

2. Call in the professionals

You may have crunched the numbers, but getting a professional second opinion on your calculations can prevent you from making a costly mistake. Being absolutely sure on how much cash flow you have is important. This means talking to an accountant who will be able to run the numbers. This can help you know if you are about to invest in property that you can afford or if you are going to bite off more than you can chew.

3. Have you considered the ongoing costs?

There is a wide range of costs that go beyond the property price that needs to be considered. This includes costs such as property management fees, repair fees, rates, body corporate fees, and insurance to name a few. Keep in mind that there is also the mortgage interest rate and ongoing fees and charges that need to be paid. Make sure to find a property that your cash flow can comfortably afford, even if it has vacant rooms.

4. Know when to let go

As much as you may plan for around your property and crunch the numbers, there are still some aspects that can be out of your control. For example, an economic downturn that causes dwelling values to fall drastically in the area in which you have invested in. According to CoreLogic, 60% of Australian property investors are losing money every week by holding onto properties that reduce their net cash flow. The key is knowing when to let go before things take a turn for the worse.

5. Potential tax benefits that you can tap into

Knowing ways, you can maximise your cash flow to work for you can be a valuable asset. There are various tax benefits that you can claim on a range of expenses that relate to your rental property. This can be claimed as tax deductions which can improve your cash flow. This will vary depending on the type of property that you hold. Therefore, it is important to check the Australian Taxation Office website to see what will be suitable for your investment.

6. Property management

The way you manage your property can lead you on the path of making a successful investment or a costly one. This means it will be likely that you will employ a property manager to oversee your property on your behalf. This comes with its own fees that vary from manager to manager. It is best to get a property manager that has a proven track record to ensure that your investment is taken care of.

Did you find this page helpful?

Thanks for your feedback!

This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

In this article

Share this article

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on pinterest

Looking for a home loan?

Compare Australia’s reputed home loan lenders with us and save.

* Terms and conditions and lending criteria apply.

Smart money saving tips

Subscribe to our newsletter.

By subscribing you agree to our privacy policy

Related articles

Easily compare home loan options today

We compare home loan options for you so you can be assured you’re seeing the most competitive interest rates available in Australia.
Manage cash flow while investing

We'd love to chat, how can we help?

By clicking "Submit", you agree to be contacted by a Savvy broker and to receive communications from Savvy which you can unsubscribe from at any time. Read our Privacy Policy.