💸 Cash Flow Is King: Why Negative Gearing Is Dead

Negative gearing used to be the golden ticket. For years, investors were told: "Buy a property, lose money every month, and the taxman will give you some of it back." That strategy worked in an era of lower rates, cheaper debt, and when property prices doubled every decade almost on autopilot.

But here’s the truth: we’re not in that era anymore. High interest rates, tougher lending rules, and tighter cash flow mean the old playbook is broken. If your investment property is bleeding money each month, you’re not being strategic—you’re just burning fuel.

Today, the real wealth builders know one thing: Cash flow is king.

❌ The Problem with Negative Gearing

Let’s call it out: negative gearing is basically paying for the privilege of holding an asset. The logic was simple: you make a loss on rent vs expenses, and then you claim that loss against your taxable income.

Sounds clever, right? Not really.

• You’re still losing money. The tax refund doesn’t cover the gap. You might save 30 cents in tax for every $1 you lose. That’s not smart—that’s a slow bleed.

• It relies on capital growth. If the market stalls, you’re left carrying a cash drain with no upside.

• Banks don’t love it. Lenders assess serviceability on your real cash flow, not your tax deductions. Negative properties hurt your borrowing power.

Negative gearing is like running a marathon with a weight vest—you can do it, but why make it harder?

✅ Why Cash Flow Positive Properties Win

Now flip the script. Imagine owning an investment that puts money into your pocket every month while it grows in value over time. That’s the sweet spot—capital growth + cash flow.

Here’s why cash flow is king:

1. It pays for itself. Positive rental income covers expenses and builds buffers. You’re not dipping into your salary just to hold the asset.

2. Banks say yes. Lenders love strong serviceability. The more cash flow-positive properties you own, the easier it is to keep building.

3. You control the timeline. Cash flow buys time. If the market slows down, you can still hold comfortably until the next growth cycle.

4. It compounds wealth. Income isn’t just survival—it’s reinvestment fuel. Positive cash flow can pay down debt or fund the next deposit.

🧮 A Quick Example

Two investors buy $500,000 properties. Same city. Same year.

• Investor A (Negative Gearing): Rents at $450/week, repayments and expenses total $650/week. That’s a $200 loss per week. Annual shortfall? Over $10,000. They get $3,000 back in tax. Net loss: $7,000.

• Investor B (Positive Cash Flow): Rents at $600/week, repayments and expenses total $550/week. That’s +$50 cash flow per week. Annual surplus? $2,600.

Both get capital growth. But one is bleeding. The other is compounding. Who’s playing the long game?

🚀 The New Playbook: Finding Cash Flow

So how do you actually find positive cash flow deals in today’s market?

• Target the right markets. Not every suburb is equal. Regional hubs, high-demand rental corridors, and emerging growth areas often deliver stronger yields.

• Buy with strategy, not emotion. Investors chase numbers, not fancy kitchens. Look for rental demand, not Instagram-worthy facades.

• Leverage tax smartly. Depreciation schedules and offsets are still powerful—but use them to boost cash flow, not to justify losses.

• Balance yield and growth. A portfolio shouldn’t be all high-yield or all high-growth. Blend them like ingredients in a recipe.