The one who bragged about buying houses with negative equity, cause he was buying sub2. https://www.biggerpockets.com/forums/61/topics/1190869-im-bu...Okay, wasn’t following prior threads.It seems like there were a few ways around this.1.

I wanted to get my feet wet in the commercial space as I look to grow my portfolio and negate risk with more units.

To me that is negative cash-flow, because I include hard and soft expenses. 

There are many reasons that adding a single ADU in southern CA is a less than ideal RE investment (i will post a list at the end) but the negative initial equity is a primary reason as the initial negative equity position consumes the initial cash flow and can take many years to recover.As for converting your home to a rental….

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.

Just responding to your negative comment.  

Prices haven't fallen, and rents haven't moved up enough.Investors either need to work harder, be more creative, accept negative cash flow, or sit on the sidelines. 

I do not care what the source of the return is  Historically the highest return is via a value add and appreciation and is more so recently due to the recent rate increase versus earlier this century (before 2022).However, most new RE investors cannot handle extended periods of large negative cash flow.  

But don't discount a deal killer as negative when they only work in your best interests.