Our Privacy Policy has been changed.

By continuing to use this site you are agreeing to our updated Privacy Policy


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.

To leave a comment, sign in or create a free account on BiggerPockets today!