What does "Break Even" mean?

[Patrick Butler]

I'm new to BiggerPockets and have not done my first long term rental deal yet.  

While listening to the podcast, I keep hearing people say you are doing well if you are "breaking even" on a long term rental year 1 with the way rent to price ratios are in most areas.  Can anyone weigh in on what they are including in "break even"?  Is it just your mortgage, property taxes, insurance v. the rent you bring in, or they also including a reserve for stuff that breaks, capital expenses, etc in their calculation?  

Thanks for help with the rookie question.

[Bill B.]

Don’t forget, if you’re “breaking even” on cash flow, you’re not financially breaking even. You’re making a profit (loan pay down) and accumulating tax breaks (depreciation).

I’ve made a profit on properties with a $800 month negative cash flow yeah one while also getting a $20k/yr tax deduction against my other properties.you can make any property cash flow with a large downpayment. But if you NEED the cash flow you’re not ready to invest in real estate. Run a proforma on any property where you NEED the cash flow with a lengthy eviction followed by $20k in turnover and 2 - 3 months of vacancy. Heck, imagine a $300/mo increase in insurance/property taxes. 

Increasing rents are where the cash flow comes from, market appreciation/inflation in where the wealth comes from. Housing has a history of appreciating just a touch more than inflation. But if you’re borrowing 80% then you’re making 5x inflation.