When I run the numbers based on these rents, the property operates at a negative cash flow.If I increase the studio's rent to $1,400 per month, the property becomes cash-flow positive.

Everyone wants to share their negative stories about Property Management Companies and then make the leap to bashing ALL PMCs!

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.

Just remember: most negative reviews are written by problematic tenants.

 @Jessica Frisk I would not be keen on the 15-yr fixed rate mortgage if that makes you cash flow negative.

Such a situation is recoverable if there is enough time for a market recovery and the cash flow is at least break-even (or there is enough reserve cash to cover negative cash flow until it can turn positive). 

I as a lender as part of settlement had our servicer unwind some negative reporting.As a sidenote I saw a post online somewhere else where someone who had an owner occupied home for several years relocated for work and teh servicer sent a letter telling them they are not in compliance with their loan because it must be owner occupied for the entirety of the loan even though the loan docs say one year....Again, servicer overstepping their bounds

The only problem with selling while occupied is that I have a huge negative cash flow.

Last year was the first and only year we had a negative cash flow, and that is driven by the anti-landlord west coast sentiment.  

On the negative side no one wishes to rent long term here!