Vegas SFR primary - Ever acceptable to Lose?

[Kyle Reynolds]

Hello BP, 

There is a 3/2 SFR in Las Vegas with a wonderful location to parks, schools, shopping, etc and I'm considering purchasing for my primary residence. The home is $10k undervalued for the area. It is a small fixer upper and I see great potential for future equity growth. It is also in a Class B neighborhood and can be easily rented at going rate of $1,350.00.

My question is this - if with 3.5% down, the mortgage note would be about $1,500.00; soon as I move out in 1 year it appears the property would be Negative cash flowing and not paying for itself. It will gain in equity/value though, in theory. 

Is it sometimes worth it to Lose? Thanks for your feedback.

[Mitch Messer]

Hi @Kyle Reynolds!

Nope, nope, nope!

The road to total financial ruin is littered with battered corpses whose last words were "It will gain in equity/value though, in theory."

As an investor, I don't ever want to plan to lose: It will happen often enough on its own without any help from me!

If a property doesn't positively cash flow, then by every known definition it is not a suitable rental investment. I would find a cheaper property or better financing at a lower rate, but I would not do this "deal" as you've described it here.