Rental income is easy to see. The ownership costs are where many investment-property budgets become too optimistic. A practical budget separates regular bills from irregular costs and keeps a cash buffer outside the calculation.
Finance costs
Interest is usually the largest recurring cost. Your repayment can change if you have a variable loan, and principal-and-interest repayments can create more cashflow pressure than interest-only repayments even though the principal component is not generally a rental deduction.
Use the Repayment Estimator for repayment scenarios, then enter the loan details into the Negative Gearing Calculator for the broader property cashflow view.
Property operating costs
Common recurring costs include:
- Property management and letting fees.
- Council and water rates.
- Landlord insurance.
- Strata or body-corporate levies for applicable properties.
- Repairs, maintenance and compliance work.
- Advertising, cleaning and reletting costs when tenants change.
- Land tax and other state-based charges, where applicable.
The exact mix depends on the state, property type and ownership structure. Obtain real quotes or historical figures where possible instead of relying only on broad averages.
Vacancy and maintenance are not optional lines
Even a well-located property can have a gap between tenancies. Maintenance is also uneven: a small annual allowance may not cover a single major repair. Treat these as part of owning the property, rather than as exceptional events that do not belong in the decision.
Do not confuse tax treatment with cashflow
Some costs may be deductible and tax rules can change. A deduction can reduce your tax, but it does not turn a cash expense into income. For tax advice, keep records and speak with a qualified tax professional who can assess your circumstances.
Run the full check
Open the Property Investor Hub, model the annual cash position, then test a higher rate and lower rent. A property should still be understandable when the assumptions are a little less flattering.