@Fernando GuzmanFor Property 1, the $1,000 monthly negative cash flow could limit your growth, despite the tax benefits.

---------------------Let’s say I know of an industrial property with a few tenants that is negatively cash flowing due to a combination of mismanagement and below market rents.

Borrowing from the equity must be done wisely, or you will end up with negative cash flow and be at high risk due to over-leveraging.NOTE: I use interest rates much lower than they currently are in 2024!

Short term or midterm rentals (under 30 days) can also limit your exposure to the negatives of California's tenant laws. 

Data geeks like me get into this stuff, but often find it consumes time and has little or actually negative economic value if your manager is already doing it.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

However, the majority of A/B properties purchases with 20% down would be cash flow negative currently.

My question is would it make sense to save for down payment for another primary residence and rent this home out with negative cash flow to get into the REI game.

A smaller down payment might lead to a break-even situation or even negative cash flow.