Rental property with low cash on cash return and cap rate

[Maxwell Shipp]

Hello real estate investors,

Newbie here with newbie questions - please bear with me! I am looking to invest in a 2 bed 2 bath condo with my brother, who would live there and I'd rent out the second bedroom. It's in a quickly gentrifying area, and I'd own and be responsible for 40%. 

After some analysis, it seems like it'd be right around $0 in cash flows. The overwhelming BP sentiment seems to be to run for the hills... but isn't there value in building equity? With my conservative assumptions, if we sell for the same price 5 years down the line, my estimated return will be around 10%, and would increase if we held it longer. We're planning on a relatively small down payment - less than 5%. 

So my question comes down to the value of investing in a mortgage and delaying returns until selling. It seems to me that even given the potentially negative cash flows, this would be profitable - not to mention the hands on experience. What am I missing here, BP?

Thanks!

Max

[Shawn M.]

If you plan on being an investor with lots of properties and cash flow. Ask yourself if this will get you there. How many of these type of deals can you do with zero return. My guess is not many. If you plan on being a mom& pop investor with one property and work a day job this property will be fine. But since you are onBP I doubt that is the case.