Six tips to manage temporary periods of tight cash flow
During 2022 the Reserve Bank of Australia increased the cash rate eight times, and in turn interest
rates increased by 300 basis points to December. Naturally, times of increasing interest rates can
result in temporary periods of tight cashflow for investors. Here, inSynergy’s Chief Property Wealth
Planner, Richard Sheppard shares his top tips for managing temporary tight cashflow.
1. Speak to your lender or broker, re-price your loans
Proactively ask your lender to re-price your existing home and investment property loans. While
your bank would have offered you a competitive rate when you first took out your loan, over the life
of the loan, and recently with the increase seen in interest rates, inevitably, unless you are on a fixed
rate loan, your interest rate and in turn repayments would have increased.
Call your lender and ask for a better variable rate. You will not need to provide any paperwork or
make any other changes to your loan, however it will help if you do some research. Know what the
market rates are for home loans and ask for a better variable rate on your loan(s). Let the bank know
if they do not match the market leading rates, you are prepared to consider moving to another
A quick phone call could save you up to $10,000 per annum. When you phone your lender and ask
for a better rate, you will often receive a rate 0.5 per cent – 1.0 per cent better than your current
rate, which will save you $5,000 – $10,000 per $1,000,000 in debt per annum.
2. Increase rents in investment properties
Look at the weekly rental amount you are charging your tenants. If you have not increased the
weekly rent in the last 6 – 12 months, or if you are not charging the market rate, increase the rent in
your investment property as soon as the lease allows.
You should always check what comparable properties are asking on realestate.com.au or
domain.com.au. If you are charging less, you are essentially donating money to someone who is not
a charity. If you want to be charitable, donate to a real charity!
Even in times of economic uncertainty, rental prices rarely go backwards. With increasing rent
amounts, and mortgages being paid down, if your property is not currently cashflow positive, it can
and will be. Across Australia, the average increase in weekly rent in 2022 was 10.2 per cent. In
Adelaide the 12-month rent increase was 12.9 per cent to an average of $518 per week, Brisbane
increased by 13.4 per cent to an average of $588 per week. Canberra remains the most expensive
capital to rent at $681 per week on average, despite recording the lowest annual rental increase of
4.3 per cent.
3. Re-finance short term debt
Short term debt (credit cards, car loans, secured/unsecured personal loans) have high interest rates
(over 20 per cent for credit cards) and high repayments. A car loan is typically a three to five year
term which means the repayments are high in order to pay it off in this time, however if they are
refinanced against a property, the term can be up to 30 years. So the repayments can be more than
80% lower! This will not only improve cash flow, but has an even bigger impact on borrowing
capacity, so you could also invest in more property to substantially increase capital growth.
4. Use your buffer
Your cash buffer should be in place to give you peace of mind, and to use in times of tight cash flow.
Remember, this is a temporary period of tight cash flow and is exactly the reason you have a cash
buffer. When your cash flow returns to a healthy position, you will be able to contribute surplus cash
back into your buffer.
5. Speak to your Advisor/Property Wealth Planner
Speak to your Property Investment advice professional. Your Property Wealth Planner can conduct a
portfolio review and provide options aligned with your strategy which can include selling a property
to realise the profit which can then be used to pay down your mortgage, increase your cash buffer or
invest in higher-yielding property.
6. Sell low-yielding property to invest in high yielding property
All property markets have a cycle which generally have seven years of high growth where prices
typically grow by 100 per cent (often called a boom), followed by a drop in values of 5 to 15 per cent.
This is followed by a period of around seven years of poor growth of 0 to 10 per cent (often called a
plateau). Yields on property in their plateau phase can be less than half that of property yields in
Given the nature of property cycles, while some markets are in their plateau phase, other markets
will be beginning or in the early stages of their growth phase. Selling property, you own in a market
which is coming to the end of its growth phase and re-investing into property in markets that are
beginning their growth phase will not only give you significantly better yields which will notably
increase your cashflow, you will also have the additional property growth which can be more than
100 per cent. Which for a $500,000 property can be a difference in growth of around $500,000 or
A million dollar property in Sydney is now renting for about $700 per week, however, a million dollar
property in Adelaide, Brisbane or Perth is renting for about $1,000 to $1,100 per week and there are
also some renting for as high as $2,000 per week when you know what to look for, so selling a low
yield property for a high yield can increase your cash flow by more that $1,000 per week.
Remember these periods are temporary and one, or all the strategies above can significantly
increase cash flow and allow you to get through the tougher times.