Most investment properties are now negatively cash flowed. What does that mean for investors?
If you hold an investment property that’s currently costing you more than the income it earns, you’re not alone.
According to the Property Investment Professionals of Australia’s (PIPA) 2026 Investor Sentiment Survey, conducted in August, nearly two-thirds (62.3%) of investors reported that their property or portfolio was negatively cash flowed, up from 56% in 2025 and just 30% in 2022. Only 23.8% reported positive cash flow.
But does this mean these properties are poor investments? Not necessarily. Negative cash flow doesn’t tell the whole story about a property’s long-term potential, and some properties that start out in the negative may become positively cash flowed in time.
What does negative cash flow mean?
A negatively cash flowed property is one that costs more to hold than it generates in rental income. After mortgage repayments, property management fees, insurance, land tax, maintenance and compliance costs, the property runs at a shortfall, which the investor must cover from their own income or savings.
Several factors have combined to push more investors into the red over the last few years, including rising interest rates and holding costs. The PIPA survey found 41.7% of investors experienced cost increases of between 11% and 20% over the past year alone. While rents have increased, it hasn’t risen fast enough to offset rising expenses for many investors.
Does this mean you’ve made a bad investment decision?Does this mean you’ve made a bad investment decision?
While many investors would prefer a positively cash-flowed property from the outset, having a negatively cash-flowed one doesn’t necessarily make it a poor investment. Cash flow is only one part of an investment property’s overall performance.
A property that costs money to hold today may still deliver strong long-term returns through capital growth. Over time, rental income may also increase, helping to reduce the shortfall and potentially move the property into positive cash flow.
The key question isn’t simply whether a property is cash flow positive or negative right now. It’s whether the overall investment case, including growth potential, rental income projections and your ability to cover holding costs, stacks up over the long term. That’s why selecting the right property and having a clear long-term strategy are important.
Why property selection is more important than everWhy property selection is more important than ever
In an environment where holding costs are rising and cash flow is under pressure, the margin for error in property selection is tighter. Properties with strong capital growth potential and good rental yields are better placed to help you weather these conditions, with rental income helping to offset holding costs.
Finding properties that offer the right balance takes time and in-depth knowledge of local markets, which is where an experienced buyer’s agent can help.
At Investors Dream, we research markets across Australia to identify properties with the fundamentals to support long-term performance. We assess population growth, housing supply, infrastructure investment, employment opportunities and rental demand to identify locations where future growth and rental returns are supported.
We’ll also help you weigh up potential rental income against ownership costs, so you understand what a property may cost to hold before committing to a purchase.