Why Investing for Cashflow Won’t Work in 2025

Bill Kim
Sep 6
2 min read

A property that pays for itself sounds perfect, right? Regular rent rolling in, more than enough to cover expenses, and a little left over. That’s the dream of cash flow investing.

But here’s the reality: chasing cash flow has never been the path to real wealth—and in the 2025 market, it’s an even bigger trap.

Cash Flow vs Capital Growth

In property, you can invest for cash flow or capital growth:

Cash flow properties deliver more rent than expenses. Example: your mortgage + outgoings = $500/week, rent = $600/week → $100 surplus.
Growth properties might cost you in the short term, but they rise in value much faster over time.

Cash flow feels attractive for short-term security, but the trade-off is usually slower long-term wealth creation.

The Hidden Downsides of Cash Flow

Tax eats your income
Extra rent = extra taxable income. If you’re a higher earner, much of that “positive cash flow” ends up with the ATO.
The wrong locations
High-yield properties are usually in regional or secondary markets. These areas lack scarcity and affluent owner-occupiers—the two drivers of sustained capital growth.
Vulnerability to cycles
Regional markets swing harder with economic ups and downs. Capital city locations, by contrast, hold value through cycles and grow steadily.
Cash flow is relative
Any property can look positive if the debt is low enough. Likewise, even a strong rental property will drain cash if it’s overleveraged. Gearing is a finance strategy, not an investment strategy.

What Really Builds Wealth

Cash flow keeps you in the game, but capital growth gets you out of the rat race.

It’s growth that multiplies your net worth, gives you equity to reinvest, and allows you to build a portfolio. Cash flow alone rarely compounds into real wealth.

So, What Should You Do?

Review your budget
Do you need income from your property now, or can you afford to hold a growth-focused investment?
Set your goals
Are you aiming to retire on rental income? Pay down your home mortgage faster? Build a multi-property portfolio?
Choose the right strategy
Once you know your goals, you can pick the strategy that fits—often a mix of capital growth assets with manageable cash flow. And when in doubt, get professional advice.