Properties that dont cash flow
I was browsing some properties in manhattan, ny and some in the surrounding area and noticed that most of these properties have a negative cash flow. So i dont understand why anyone would want to invest in these properties.
One property for example was 8,750,000 and had a cap rate of 5%. that means it only brings in $36,458 per month after expenses. However i got mortgage quote frome CITI and it would be about $39,000 per month for the mortgage for 30 years with 20% down. And under a 5% interest rate.
This and many other apartment buildings in the city have negative cash flow. What is the reason for this and who would invest in this type of property?