Why is cash flow important?

[Chase A.]

I am very new to real estate investing and was wondering why cash flow is so important. If you can rent a house out and have the rent cover the expenses and mortgage with nothing left over isn't it still a good deal? Obviously extra money is always preferable but isn't having your renters pay down the mortgage without any cash flow still a good deal?

[David Dachtera]

@Chase A.,

A business - REI IS a business! - should pay for itself, would you agree?

Each property needs its own reserves for "stuff" that happens, especially out your way with the weather you've been having.

Equity is "nice", but it doesn't pay the bills. You want you income properties to produce ... well, income. Eventually - either now or in retirement - you'll want to let go of your 9 to 5.

Would you take job that didn't provide income?

Why keep property which doesn't produce income?

The definition of an "asset" is one which produces income beyond it's expenses. Otherwise, it's a liability.