All Forum Posts by: Mark Kohn

Hi all,

Thanks for the responses and warm welcome to the forum- really appreciate you all providing your insight into my question. 

A couple have mentioned that you shouldn't buy a cash flow negative property because it will be a challenge when you need a new roof, have a vacancy or have a maintenance issue. Isn't that all typically accounted for in the property analysis and built into your rental price (I have been using 5% vacancy, 5% maintenance/repairs, etc in my analyses)- is there something else that I am missing here? 

If I can't cash flow, why isn't there value in buying an asset with someone else building your equity for you? Quick math on a 400k SFH with 20% down, the principal would be paid down about 5600 in year 1 and 5800 in year 2, etc. I get that this is overly simplistic, but if I'm out of pocket $200/month to get $466/mo in equity thats not horrible, understand this is not liquid and if the cash is important then this is not ideal.

Again, I'm coming at this as a way to build long term wealth in addition to day job and not necessarily looking at BRRR to multiple properties etc. Between deductions and appreciation it seems at least in certain markets, you don't need to cash flow to have a nice real estate ROI and build wealth. Thanks again for your thoughts!

Hi all,

Looking to get into real estate investing and have a super basic question but I couldn't really find an answer so please bear with me!

I see lots of information around cash flow and the importance of cash flow in owning rental properties and analysis for investment/purchasing. My question is, why isn't it smart to buy cash flow negative properties that are still paying down your principe and building equity for you- assuming you have the cash to support? For example, if the cash flow is -$200/month but the tenant is paying down your mortgage, isn't there a value to that from an investment perspective? If so, what is a reasonable loss per month to tolerate to build this equity? $100/mo, $200/mo? In this example I would be paying $2,400 per year to own this property to get all of the deductions and build equity in the property? Not particularly concerned with appreciation.

For perspective, I live in southern California and find it hard to find cash flow positive properties based on todays price. I'm investing for long term wealth, not to replace my current full time job income.

Thanks in advance for any insight!