Is it OK to buy into a Negative Cash Flow Property?

[Kenneth M.]

Hello, 

Newbie here!

I'm putting an offer in on a triplex in southern California for about $950k

Its in a desirable area and it brings in about $5k a month in rents. The rents are about as high as they can go, so I can't increase them. 

If I put 25% down, consider some for capex, vacancy, repairs and property managment, I'm looking at about $300 negative a month. (property mgnmt is $450). 

I don't need the cashflow and see it as a long-term investment. 

Given these scant details, does it seem just wrong to go negative? (there are no properties in so cal areas that are positive when you factor in prop mgmnt and 25% down). 

Or would I be better off just paying off the home I am living in?

[Jon Magnusson]

If my memory from the BP podcasts serves me right, this is called speculating. With 200 - 250k at your disposal you could easily find a SFH house in South Orange County in the 600-700k range. With your down you should be able to cash flow between $200 to $500 for the right property. Rents in the right area down here for a 4 bed 2 1/2 bath are starting @ $3k a month and only going up from there.

Long story short, if you can't cash-flow on that property I would find one that will.