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See what it takes to make your property negative cash flow

Posted on Friday, May 30, 2014

So I posted this the other day as a answer o someones question and got a vote - so thought others might find this useful as well. When buying a property, for modeling purposes you sometimes wonder how far off you can be before you are negative cash flow. Instead of just a flat percentage discount - I think it's better to model percentage amount less against months of vacancy.

So in the example above, I can be 15% off on my rent amount and have 4 Vacant months of a unit, and still be cash flow positive. But If I'm 20% off and have 4 Vacant months of a unit - then I'm going to have a negative cash flow.


Comments (1)

  1. Tiny_1403313351-avatar-nattydread

    John: We are cash-flow driven. In addition to stretching the vacancy in our modelling, we also look at the projected {discounted return} using the assumption the property will depreciate (1-4%/annum) over the hold period.


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