Negative Cash flow on Second property

[Nehru Raju]

Hi,

I recently purchased my first rental property in VA and it generates positive cash flow around 250 after all expenses, insurances etc.

I am trying to purchase another property(Condo) in Franklin Park, NJ. With HOA and other expenses like insurance, taxes, it will generate around negative cash flow of around 700 dollars per month. The reason I am interested is I lived in this area and it still has a lot of potential for growth and felt it will yield good returns in next two years if sell the property. Vacancy won't be an issue in this area and pretty confident it will be filled up as it's near to almost everything like train stations, grocery stores, hospitals etc. So until then, it will be negative asset to me.

I would like to make a decision before it's too late as I bid with asking price , Am I over optimistic or let it go? Will there be any advantage on taxes considering two properties with one being positive cash flow and other will be negative cash flow?

Property Info : 320K, 2 Bed, 2 bath, Condo, Franklin Park, NJ

[Andrew Syrios]

HOA fees often kill cash flow. I wouldn't go for something with a negative cash flow unless you 1) have very good built-in equity and 2) there's a really good reason to think the area will appreciate.

At negative $700 a month, I think I would pass. That's a tough hit. There should be something around there that cash flows better than that.