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Updated over 2 years ago on . Most recent reply

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62
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16
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Colby Burt
16
Votes |
62
Posts

Seller Financing but Negative Cash Flow

Colby Burt
Posted

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?)

Most Popular Reply

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868
Posts
636
Votes
Taylor Dasch
  • Real Estate Agent
  • Temple, TX
636
Votes |
868
Posts
Taylor Dasch
  • Real Estate Agent
  • Temple, TX
Replied

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

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