After years of topping up negatively geared properties, New Zealand investors are increasingly focused on cashflow. A cashflow positive property is one where rental income exceeds all expenses-meaning it pays for itself and puts money in your pocket each month.
What Is Cashflow Positive Property?
A cashflow positive rental property generates more income from rent than it costs to own. After paying the mortgage, insurance, rates, maintenance, and property management, there is money left over.
Consider a property renting at $650 per week, generating $33,800 annually. Once you subtract typical expenses-mortgage interest of $25,000, rates of $3,000, insurance of $2,000, maintenance of $2,000, and property management fees of $2,700-total expenses reach $34,700. That leaves you $900 per year in the red.
In this example, the property costs $900 per year to hold. To become cashflow positive, you would need to either increase rent or reduce expenses.
What Yield Do You Need?
Gross yield is the annual rent divided by the property value, expressed as a percentage.
| Gross Yield | Likely Cashflow Outcome |
|---|---|
| Under 4% | Significantly cashflow negative |
| 4-5% | Typically cashflow negative |
| 5-6% | Cashflow neutral to slightly negative |
| 6-7% | Potentially cashflow neutral |
| 7-8% | Cashflow neutral to slightly positive |
| 8%+ | More likely to be cashflow positive |
| 9%+ | Strong chance of cashflow positive |
Key insight: To be genuinely cashflow positive with typical NZ interest rates (around 5-6%) and a 35% deposit, you generally need gross yields above 7-8%. Very few properties in Auckland or Wellington achieve this without adding value.
Use our rental yield calculator to calculate yields for specific properties.
Property Types That Perform Best
1. Apartments and Units
Apartments are relatively cheaper to purchase while still attracting good rents. This means higher yields and better cashflow performance.
The advantages are compelling: you get a lower purchase price relative to the rental income generated, which directly improves yield. Rates and insurance costs tend to be lower than for houses, and the body corporate handles exterior maintenance so your ongoing costs are more predictable. Central locations typically see strong rental demand, reducing vacancy risk.
That said, body corporate fees eat into your cashflow and can increase substantially over time. Whether the property is leasehold or freehold matters significantly for both financing and resale value. Some apartment markets also show smaller capital growth potential compared to standalone houses.
2. Multi-Unit Properties
Duplexes, triplexes, and small blocks of flats often achieve superior yields because you get multiple rental incomes from one purchase.
To illustrate, consider a property with two 2-bedroom units renting at $450 per week each. That generates $46,800 in annual rent. If you purchase for $750,000, you achieve a 6.24% gross yield. A standalone house at the same price might only rent for $600 per week, delivering just 4.16% yield. The multi-unit property generates significantly better cashflow from the same capital invested.
3. Properties with Minor Dwellings
Adding a minor dwelling (sleepout, granny flat) to an existing property can dramatically improve cashflow.
A typical minor dwelling costs between $120,000 and $180,000 to build, but can generate $350 to $450 per week in additional rent-that is $18,200 to $23,400 per year. This represents a yield of 10-15% or more on your renovation investment, making it one of the most effective ways to improve cashflow on an existing property.
4. Boarding Houses and HMOs
Multi-room rentals can achieve very high yields-typically 8-12% or more-but come with more intensive management requirements.
Running a boarding house means complying with specific regulations, dealing with more frequent tenant turnover, and managing higher maintenance costs. The management intensity is significantly greater than a standard rental, and the model is not suitable for all property types or locations. For investors willing to put in the work, however, the cashflow returns can be excellent.
Best Locations for Cashflow
Some regions consistently offer better yields than others:
| Location | Typical Gross Yield | Notes |
|---|---|---|
| Invercargill | 6-8% | Highest yields, slower capital growth |
| Dunedin | 5-7% | Strong student demand, seasonal patterns |
| Palmerston North | 5-6% | Stable employment base |
| Rotorua | 5-7% | Tourism and local employment |
| Christchurch | 4-5% | Good balance of yield and growth |
| Wellington | 4-5% | Lower yields but strong rental demand |
| Auckland | 3-4% | Lowest yields, historically strongest growth |
The trade-off: High-yield areas often have slower capital growth. Auckland and Wellington have lower yields but historically stronger price appreciation. Your strategy depends on whether you prioritise cashflow or growth.
Strategies to Improve Cashflow
1. Add Bedrooms
Most bedroom additions use internal wall partitioning that does not require building consent. For an investment of $6,000 to $10,000, you can typically add $40 to $60 per week in rent-that is $2,000 to $3,000 per year, representing a 20-30% return on your renovation investment. Converting a garage to a room or adding a partition to create an extra bedroom can significantly boost rental income.
2. Allow Pets
Under new NZ tenancy legislation taking effect in late 2025, landlords cannot blanket ban pets but can charge a pet bond (up to two weeks rent).
Impact: Pet-friendly properties often rent faster and can achieve $10-30/week higher rents.
3. Furnish the Property
Furnished rentals command higher rents, particularly in areas with short-term tenants such as students and professionals on temporary assignments. An investment of $5,000 to $15,000 in quality furnishings can generate $50 to $100 or more per week in additional rent. This strategy works best for apartments and properties near universities or CBDs where transient tenants value the convenience of ready-to-occupy accommodation.
4. Refinance to Lower Rates
With interest rates having dropped significantly from 2024 peaks, refinancing can reduce your costs substantially.
Example: Reducing your rate by 0.5% on a $500,000 loan saves $2,500/year-often the difference between negative and neutral cashflow.
5. Review Your Expenses
Small savings across multiple expense categories add up. Shop around for landlord insurance annually rather than auto-renewing-premiums vary significantly between providers. If your rates seem high, challenge your council valuation. Use a property manager who negotiates competitive maintenance rates, or consider self-management to save the 7-10% management fee altogether.
6. Increase Rent to Market Rates
Many landlords undercharge relative to market rates, especially for long-term tenants. While maintaining good tenant relationships matters, significantly below-market rents hurt your investment returns.
Check market rents on Trade Me Property and with local property managers before any rent review.
The Deposit Impact on Cashflow
Your deposit size significantly affects cashflow outcomes:
| Deposit | LVR | Mortgage on $600k Property | Approx Annual Interest | Impact |
|---|---|---|---|---|
| 20% | 80% | $480,000 | $27,000 | Likely cashflow negative |
| 30% | 70% | $420,000 | $23,500 | Still likely negative |
| 35% | 65% | $390,000 | $21,800 | Closer to neutral |
| 40% | 60% | $360,000 | $20,000 | Better cashflow position |
| 50% | 50% | $300,000 | $16,800 | Strong cashflow potential |
Key insight: With standard 30-35% deposits, achieving positive cashflow requires either very high yields (7%+), adding value through improvements, or buying in regional areas.
New Builds vs Existing Properties
New Builds
New builds offer several cashflow advantages. The 20% deposit requirement (compared to 30-35% for existing properties) means a lower equity requirement, freeing capital for other investments. You get full interest deductibility from day one, lower maintenance costs in the early years, and layouts often designed specifically for the rental market.
The disadvantages are equally important to consider. New builds are often purchased at premium prices, which can offset the deposit savings. The land value component may be lower than for established properties in the same area, and there is less scope to add value through improvements since everything is already new.
Existing Properties
Existing properties offer different cashflow benefits. They are often purchased below replacement cost, particularly in buyer's markets. There is significant potential to add value through renovations or minor dwellings, more room for price negotiation, and you can verify the established rental income history before purchasing.
On the downside, existing properties require a 30-35% deposit, may need work to meet Healthy Homes compliance standards, and typically involve higher ongoing maintenance costs as the building ages.
Realistic Expectations
Most investment properties in major NZ cities will not be cashflow positive from day one-especially with 30-35% deposits and current interest rates.
The questions that matter are whether you can afford to hold the property through its negative cashflow phase, whether rent increases and principal paydown will improve cashflow over time, whether you are actively adding value to boost rental returns, and whether capital growth is part of your total return calculation.
A property with 4% yield but 5% annual capital growth may outperform a 7% yield property with 1% growth over the long term-but only if you can afford to hold it.
Run the Numbers Before You Buy
Cashflow positive property is achievable in New Zealand, but requires careful property selection, realistic expectations about yields, and often value-add strategies to improve returns. Focus on yield before purchase, consider property types beyond standalone houses, and run the numbers carefully.
Use our borrowing power calculator to understand how much you can borrow for investment property.
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