There is a lot of talk about saying negative gearing may be up for change with Labor promising to slash negative gearing on existing properties for investors as well as a reduction of the Capital Gains Tax discount.  The Government is considering a universal limit on income tax deductions applying to negative gearing.

Recently Bankwest have announced that they are no longer including tax refunds in their serviceability calculations on investment loan applications.  Perhaps this is a test case for the CBA to follow suit?

If the benefits of negative gearing were reduced, I’m wondering how many investors would no longer be able to service their mortgages on investment properties.  Additionally, will that mean that people won’t want investment properties anymore?  I don’t believe so.

Many people don’t rely on the tax refunds for cash flow losses on their property investments.  In other words, they are receiving enough rent to cover the interest payments and other costs for owning the property.  This means they are neutrally geared, or in fact, positively geared when the rent exceeds the costs.

If this become to only way to be able to afford an investment property, many more investors will increasingly turn away from higher priced low yielding homes.

The investment strategy with negative geared property, it to hope for capital growth using renovations and value adding strategies so you make a lump sum when you sell.

Alternatively, with neutrally or positively geared property investing, the objective is not to sell to make money, but to have the property pay itself off and then you can use the rental income to live off and replace your employment income.  This is usually a lower risk strategy as you are less reliant on your other income to service the mortgage.

There are suburbs all over Australia where homes can be bought offering positive cash flow immediately.  The hard part is to find where.

To narrow your search if you go to the “Invest” tab on, you can mouse over each suburban area to get insights on the median price, median rent and the estimated net cash flow.

For a 2-bedroom unit in each of the major cities, I found the highest average positive cash flow to be found in:

State Suburb/area Median price for 2 bedroom unit Median weekly rent Estimated monthly cash flow
NSW Punchbowl $428,000 $390/wk $249/mth
VIC Carlton $515,000 $535/wk $541/mth
QLD Upper Mount Gravatt $404,000 $425/wk $484/mth
WA Queens Park $281,000 $280/wk $269/mth
SA Adelaide city $420,000 $430/wk $449/mth


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