Would You Buy a Rental Property with Negative Cashflow?

[Jordan Petty]

Good Afternoon Everyone,

My name is Jordan and I am from Houston, TX.  Currently in process of getting my real estate license and have a long-term goal of buying rental properties to eventually cover my monthly expenses and to give back to the people in my life who got to where I am at today.

I tend to get discouraged when I analyze properties (in Houston) where the cash flow is slim to none. Maybe I am being too conservative on expenses and rate increases? I have been mainly looking on Zillow and have been using the BP calculator for my analysis. Because of this, I have even tried analyzing properties out-of-state such as in Tulsa, OK looking at properties that seem lower risk ($40K + price range) and better cash flow. It also seems so far away because I am just now starting to save for a property, as most of it has gone to build of my 6 month emergency fund (Sometimes I think about using my emergency fund to buy my first property). With investing right now seeming like a stretch, I kept thinking and thinking only to have the light bulb go off.

What if I could get away with buying a property that may have $-100 cash flow and just eat the $100 loss? I have a full-time salary job and because I am super on top of my personal budget each month, I know that I will have about $1,000 leftover each month after all my personal expenses. So If I bought a rental property that cash flowed -$100 or - $200, I would basically just be paying $100 - 200 a month from my $1,000 that I have left over from my work income. The rest would go towards saving for more properties.

With all that being said, is there anyone on here who has done this, fell into it by mistake, or would consider doing this? Or is this just a bad idea altogether? 

I am open to all opinions. Feel free to even tell me its dumb idea. I am just looking for some guidance on how to get started.

Thank you,

Jordan Petty