Cashflow – The Property Investors New Nightmare

By Lighthouse | July 2, 2022 | 5 Min read

The headlines aren’t good, the news is worse.

It’s no surprise that owning a rental property has become significantly more expensive these days, here are some recent changes that have caused property ownership to soar:

  • Interest rates have doubled in the last 12 months
  • Interest deductibility is being phased out
  • Inflation has caused city rates, insurance, property management and other costs to spike

How bad are these changes for your cashflow? Here’s an example for a property that has no interest deductibility:

Before Changes 
Income (rent @ $750 PW for 50 weeks) $37,500.00
Less Expenses 
Rates $3,500.00
Insurance $1,500.00
R&M $2,500.00
Interest Deduction ($1,000,000 @ 5.19%) $51,900.00
Property Management $3,750.00
Accounting $1,200.00
Total Expenses $64,350.00
Net Taxable Profit -$26,850.00
Tax @ 33% $0.00
After Changes
Income (rent @ $750 PW for 50 weeks) $37,500.00
Less Expenses
Rates $3,500.00
Insurance $1,500.00
R&M $2,500.00
Interest Deduction ($1,000,000 @ 5.19%) $0.00
Property Management $3,750.00
Accounting $1,200.00
Total Expenses $12,450.00
Net Taxable Profit $25,050.00
Tax @ 33% $8,266.50

That’s an additional $8,266.50 you’ll need to find for your property. What have you done to prepare for these extra costs?

The longer you wait, the worse it’s going to be

The silver lining is that there are strategies you can put into place to mitigate these costs, the sooner you act, the more effective they will be. Our Mortgage team (who are also investors) have been using some of the following ways to help our clients find more cashflow in their properties:

  • Interest only extensions
  • Locking in interest rates early
  • Switching banks that provide better structures
  • De-risking highly leveraged portfolios

Book your free 1-1 online session

In this free 30 minute meeting, we will work through your current situation and we will outline strategies that we can implement for you.


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