Login
Beyond the mortgage: The costs draining investors’ cash flow in 2026
As cash flow moves to the forefront of many investors’ strategies, budgeting for expenses that quietly erode rental returns will be key to maintaining and growing their wealth.
From repairs and insurance to body corporate fees and vacancy periods, investors have been urged to budget for the expenses that can discreetly eat into their cash flow.
Property Strats founder Steve Ash said following the recent property tax changes and stricter rental laws, investors needed to take a disciplined approach to budgeting for ongoing costs.
Here are the expenses to look out for:
Body corporate fees
As some investors adopt a cashflow-centred strategy and pivot to units following the negative gearing changes, Ash said they may not necessarily consider annual body corporate fees.
“People are moving more towards the types of assets with potential special levies that they might not factor in,” he told SPI.
For boutique units, Ash said investors might have to pay up to $4,000 per year for body corporate fees, which covers maintenance for shared areas, and building and public liability insurance.
In contrast, Ash said that high-rise body corporate fees were significantly higher as they had more features that needed maintenance, including elevators, underground carparks and swimming pools.
“With the high rise, it could be anywhere from 4,000 up to 12,000 plus,” he said.
“There’s a lot of forensic that needs to happen regarding the body corporate documents; you’re looking at the capital expenditure that’s been done, or what might be forecast, etc,” he said.
Repairs
When it came to general repairs and maintenance, Ash said investors often failed to appropriately have a sufficient buffer in place to deal with potential costs.
“With units, I have about $1,000–2,000 roughly budgeted there annually, but always try and have 10,000 per property, just in case the worst happens like a roof or something like that,” he said.
Ash said houses tended to require a larger buffer, given that more issues can arise from established homes, and investors should put aside 2,000 to 4,000 per year.
As investors lean more towards new-build investments after the negative gearing changes, Ash said they would likely have the advantage of paying less for maintenance.
“If you’re buying a 1950s to 1970s house and it’s not compliant, then obviously you’re going to get much more maintenance-type items than a newer type property.”
Ash said strict rental guidelines, particularly in Melbourne, meant investors faced the added pressure of ensuring they met minimum tenancy standards, spending up to $400 or $500 per year to make a property compliant.
“If you have an older property, you generally have to spend quite a bit of money making it compliant, so there might be heating and cooling, curtains that need to be updated, locks on the windows.”
Landlord and building insurance
For investors with rental properties, Ash said it was crucial to purchase both landlord and building insurance every year to ensure they were protected from unforeseen circumstances.
Ash said that the cost for units was around $450 per year, while house investors could expect to fork out around $1,500 or $2,000.
Without landlord insurance, Ash said investors could find themselves in a vulnerable situation if the tenant stopped paying rent, particularly in jurisdictions with high renter protections.
He said he had seen some tenants delay eviction by making partial rent payments, potentially leaving landlords without rental income for an extended period of time.
“Then if they do have that and you don’t have land on insurance, then there’s no way of claiming any of that rent back. So it’s critical to have that in place.”
Ash also said building insurance was critical to keeping investors protected from incidents where major damage could occur.
He said the costs varied across the country, with flood-prone areas, such as Brisbane’s north, often being around $2,500 per year, while the southern states were often cheaper.
“That covers you for any damage or accidental damage on buildings, etc,” he said.
Property manager fees
While landlords may want to chase low property management rates, Ash advised investors to seek out the most capable individuals to ensure their property was in safe hands.
He said Melbourne and Sydney usually had the lowest rates, 5.5 to 6 per cent of the weekly rent, Brisbane’s rates were usually 8 per cent, and Adelaide was around 7 per cent.
“But then Perth gets really expensive. It’s about nine to 10 per cent there. And so Perth’s one area where you should shop around as much as you can.”
Ash also advised investors to watch out for the small print when they signed agreements, including the releasing and re-letting fees, warning they can get costly.
“It’s important to go through everything just to find out what you’re up for,” he said.
Vacancy
Ash said a potential issue for cash flow that investors often forgot about was vacancy, assuming that their property would be rented out for 52 weeks a year.
“Every week it’s not rented becomes a cost that hurts the bottom line, and while the vacancy rates are quite tight across a number of states, it’s taking four weeks, for example, to get new tenants in,” he said.
“Not just because they might not be there, but the good applicants might not be able to move in till this particular date.”
To prepare for the worst, Ash said investors should calculate their cash flow based on around 48 weeks a year of occupancy.
“I put in anywhere between two to four weeks of lost rent on whatever it’s going to be. And if you’ve got to re-let the property out, then there’s a re-letting fee as well. All of these things add up over time.”
Want to see more stories from trusted news sources?
Make Smart Property Investment a preferred news source on Google.
Click here to add Smart Property Investment as a preferred news source.