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The possibility of property values starting to stagnate is forcing a lot of investors to look for properties that will earn them an immediate profit.

Many property investors in Australia, especially those who started investing during the early twenty-first century boom years, have been taught to think in terms of negatively geared capital growth. However, the emergence of a slowing property market in terms of capital growth is pushing investors to reconsider how they approach investing.

Many people are putting more emphasis on rental yields and the cash flow, whether to earn a profit in the short term or to improve serviceability in order to pursue a negatively-geared strategy. But how does one recognize a cash flow positive in a property – and how does one know if a certain investment is indeed a good deal?

It is fair to state that in Australia, cash flow positive properties are not ten-a-penny. The approximate rule of thumb used to identify a property with a positive cash flow is that the rental yield must be a couple of percentage points above the current mortgage interest rate. So, currently, the rental yield should be around 9 to 10 per cent. Only 17 suburban areas or towns nationwide featured a median rental yield that is above 9 per cent, and the majority of these are located in regional areas.

That does not necessarily mean that properties with a positive cash flow cannot be located or created in other places: but searching regionally is definitely a great place to begin.