Is it wise to keep a negative cashflow home in the bay area for appreciation, if you can fund the negative cashflow from the positive cashflows generated from other properties. The advantage I see is the huge depreciation benefit that the property gives along with the actual negative cashflow (loss). Ideally I think it's good to have a mix of appreciation and cashflow in the portfolio, wanted to see what experts think. My strategy is to keep the property for next 7-10 years with negative cashflow but generate way more positive cashflow from other investments and also make tax free gains on the generated cashflow due to the huge depreciation benefit.
Hopefully we can get @Brandon Hall on this conversation, because I could be wrong about the next statement I am about to make and I would like his opinion on it. I think from a tax perspective, I think the IRS may become suspicious of a business or an investment that continues to make negative profits for years. They would ask why has this person either filed for bankruptcy or sold the property?
Once again, I may be wrong and hopefully other experts on here may be able to chime in.
Negative cashflow isn’t negative profit, not even close. There are already several forum topics that go on for hundreds of posts if you’re interested.
I have a property with negative $6,000/year cashflow with positive $12k/year income. Change your financing and you’ll change your cashflow
Imagine almost every vacant land investment purchase in history. Almost zero cashflow and yet people keep doing it, I assume they’re making a profit.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing