For example, if the property you are buying is a development property, like a small house with a large lot in a developing area, then a small negative cash flow could be okay if you can carry it.

I’ve been down that road of carrying a line of credit on a property before, and the stress can realy pile on when you’re staring at that monthly interest.

Don't over leverage and carry reserves.

HELOCs carry higher rates than cash out refis.

Quote from @Carrie Baron: @Sean O'Keefe may I pretty please request a copy of the log book as well?

I would ask...Are carrying costs a problem moving forward?

A D class neighborhood will carry a stigma with local residents.

But they'll also get the stop up costs basis too.Well if you aren’t selling anything then you won’t need to worry about depreciation recapture.Yes, whatever you don’t use gets carried forward.

They will also often carry very expensive interest rates and have other fees tacked on.

@Jennifer Fernéz I run sum numbers for you with our tool, see comments and pics below before refinancing and post refinancing .Financial Breakdown: Purchase Price: $200,000 Mortgage (LTV 80%): $160,000 Interest Rate: 6% (30-Year Amortization) Mortgage Monthly Payment: $959Upfront Costs: Down Payment (20%): $40,000 Closing Costs (3.5%): $7,000 Renovation Costs: $15,000 1 Month of Carrying Costs During Renovation: $1,548Total Upfront Required: $63,548Year One Rent: Monthly Rent Income: $2,000 1 Month Rent Losses during renovations (-$2,000): -$167/month distributed over 12 months Total Rent Income: $22,000 per year => $ 1,833 per monthMonthly Expenses: Mortgage Payment: $959 Property Tax (Assuming $3,000/year): $250 per month Property Insurance (Assumption): $100 per month Utilities (Hydro, Gas, Water): $275 per month Assuming 5% Vacancy: $92 Assuming 0 % Repairs & Maintenance first year because unit has been recently renovated Total Monthly Expenses: $1,676Monthly Net Cash Flow: $157Post-Renovation Refinancing Strategy after 12 months:So far, we’ve purchased the property, completed renovations, and rented it out.Next, you can approach the bank for a refinance to consolidate a portion of your initial investment into a mortgage.