Noob question: Ok to buy negative cash flow but build equity?

[Mark Kohn]

Hi all,

Looking to get into real estate investing and have a super basic question but I couldn't really find an answer so please bear with me!

I see lots of information around cash flow and the importance of cash flow in owning rental properties and analysis for investment/purchasing. My question is, why isn't it smart to buy cash flow negative properties that are still paying down your principe and building equity for you- assuming you have the cash to support? For example, if the cash flow is -$200/month but the tenant is paying down your mortgage, isn't there a value to that from an investment perspective? If so, what is a reasonable loss per month to tolerate to build this equity? $100/mo, $200/mo? In this example I would be paying $2,400 per year to own this property to get all of the deductions and build equity in the property? Not particularly concerned with appreciation.

For perspective, I live in southern California and find it hard to find cash flow positive properties based on todays price. I'm investing for long term wealth, not to replace my current full time job income.

Thanks in advance for any insight!