Negative cash flow?

[John Yanko]

Have you ever bought a multifamily that had negative cash flow? If so why?

[Hasan Hamdan]

One of the reasons investors buy properties with negative cashflow is becuase reporting that loss may be better for tax purposes and they could save money. In addition it could be in an up and coming area so eventually it could turn into positive cashflow as well.

[Brett Russell]

@John Yanko, if the negative cashflow is because of under market rents, vacancy, and poor management and you see definite areas for improvement, then you might be able to get a very good deal and then turn it around and turn it into a great asset.

[Leandro Rodriguez]

I agree with @John Yanko - BIG difference between buying "into" a property that is not cashflowing vs buying "knowing" you will not cash flow.

First case, you have to have proof you can turn it around, the market is coming up, you can make a difference in management, repairs, raising rents, etc. You have to run your numbers and be certain of your assumptions.

On the second one, unless you are experienced and have a financial situation that allows you to take advantage of the loss - or you are speculating with appreciation, it is hard for me to justify.

[John Yanko]

@Hasan Hamdan good to know 

[John Yanko]

@Brett Russell I could only hope to find a deal like that In my area

[John Yanko]

I really need to focus on seeing potential improvements for multi families. 

[Alexander Felice]

negative cash flow CAN be ok in a deal but in my opinion those reasons are rare.

as others have said, it can be ok for tax loss purposes, if rents are under market value, if the property is in need of rehab, or if it's just a matter of waiting until old tenants leave. 

Now, if you're taking a permanent negative cashflow deal in hopes that appreciation will save you, then this is a mistake you're making! 

only other way I would consider it is if there were some large equity position.