One thing to watch out for is Negative Amortization.

Since your rent may be fixed for a much larger period of time, a sharp rise in interest rates can cut seriously into your cash flow (or even turn it negative, potentially); and (2) higher interest rates will drive cap rates up (since buyers will need to be able to cover the mortgage with a higher interest rate).

But factor in people doing midnight moves and you might end up with a negative cash flow.

I want to learn as much as I can about the various elements of REI and rehabbing, as I feel I should be as prepared as possible before getting myself into what could be a huge risk with big negative consequences if not handled correctly.

I'm a noob with a negative cash flow on 3 properties :goofy: .

Here's how I would evaluate this deal.Gross rents: $2,100Operating Expenses: $1,050NOI: $1050Mortgage (P & I, 30 yr, 7.5% NOO) $1,084Cash Flow: - $34 per month (negative cash flow)THIS IS NOT A GOOD DEAL!

Are you in a negative cash flow?

Beerock,I don't think you understand operating expenses yet, so I'd bet that the properties you're looking at are negative cash flow, not break even.

Then BANG, I call my partner, and he just starts putting things in the negative state..

And yeah...some people have negative cash flow banking on appreciation in certain markets.