What financial rules do you follow when buying? Negative cash flow?

[Matthew Mclean]

Would you consider negative cash flow for a house that will appreciate and rents will increase?

[Russell Brazil]

This is a really important concept to understand especially as rates have risen.

If a property has a tenant in it paying, it is not negative cash flow in and of itself. 

What most people call negative a negative cash flow property, is in fact cash flowing....but it is the debt against the property, the leverage, that is causing them to lose money on a monthly basis.  This is important to understand that the risk of leverage, is completely independent of the risk of the property. One investor might buy the property in cash and have 0% leverage. Another investor might have 100% leverage. So the risk of the 2 investors leverage is drastically different.....but the risk inherent in the property has not changed whatsoever.