Cash flow negative but making a profit. I think?

[Antonio Palumbo]

This is my first post so please be bear with me:

 I own a co-op in NY and have been renting it out. The numbers: Mortgage – $1580 Maintenance - $1,462 Sublet Fee - $281 – so it costs me $3325 a month to keep the apartment. I rent it out for $3,150 a month Therefore, to justify the $175 a month loss – I figure as long as I cover Interest/ Maintenance/ sublet fee it works out. I think of the equity as moving money from my bank account to the apartment. (That I can eventually pull out) Yes, I understand that insurance and other miscellaneous items need to be considered, but I want to keep this simple.) The numbers I use so I do not loss sleep at night: Interest on the mortgage - $705 Maintenance - $1,462 Sublet Fee - $281 for a total cost of $2448 Therefore, I make a profit of $702 a month. Am I just deceiving myself?

[Ken Dillard]

@Antonio Palumbo I am in a similar situation.  We paid retail for a condo where my daughter attends college.  We rent two rooms which (depending on utilities each month) can go cash flow negative by about -$100 high end.  But we are avoiding paying up to $30,000 in housing costs during her education.  Potential small negative cash flow but we went in with our eyes open and if we get no appreciation or even a drop we still gained the value of NOT paying for her housing.  We made the decision it was OK.  When she graduates we will review and decide if worth keeping or selling and roll that to a different investment.

In another deal we were considering would have been a significant negative cash flow for 8-9 months to co-develop 2 single family homes with the potential of a nice pay-off.  At that time we could not swing the negative cash flow and deemed could not take the risk.

With anything just make sure it is a deliberate decision and sounds like you have.