Seller Financing but Negative Cash Flow

[Colby Burt]

Hi,

I have an opportunity to acquire a 3/2 under the following seller financed terms: Purchase Price: $420,000 5 Year Note & Mortgage Principal-Only Payments of $2,000/month 4% interest, paid at the end of the term along with remaining principal balance I have ran conservative and aggressive numbers for a long-term rental: any way you slice it, it negatively cash flows about $400/month. I am unable to run it as an STR due to zoning laws. I ran numbers as a mid-term rental (such as for travel nurses using a corp lease platform like Furnished Finder) and it also negatively cash flows at about $200/month. My question is, should I not do this deal bc it negatively cash flows? Or does the fact that I put no money down, and a tenant would pay down most of the principal each month make this a good deal? (In short, is paying $400/month for an asset with principal being paid down for 5 years a good investment?)

[Taylor Dasch]

I wouldnt do it, negative cash flow can hurt your ability to scale in the future. It may appreciate but that is never guaranteed.