Never invest in a cashflow negative property?

[David Campbell]

I invested in a property in property in San Diego in 2015, whose numbers were indicating it was going to be cashflow negative by a couple hundred dollars per month. I was a little surprised at the near universal advice I received which was along the lines of "never, never, invest in cashflow negative properties." Whenever I hear the term "always" or "never" as a rule, I become suspect. I bought anyway. As I just sold it, I wanted to post the stats here to get people's opinions.

Purchase year: 2015

Purchase Price, etc: $585k, 0% down (va), 30 yr fixed at 3.825%

Cashflow negative amount per month: $300-400, but let's call it $400.

Total cashflow negative when I went to sell in 2021: $31,200 ($4,800/year x 6.5 years of ownership)

Sale year: 2021

Total left on loan when it sold: $480k

Sale Price: $1,006,000

Gross gain: $526,000 

Net gain: $465,000

So, it would have been smarter to forego this acquisition and the net gain in order to save $31,200? Or did I miss something.

While I agree that generally cash flow negative properties should be avoided, be careful when people advise you in absolutes. 

[Greg Scott]

I'm in the "never" camp.

A rising tide raises all boats.....but when the tide goes out, you see who is swimming naked.

Only a moron lost money in real estate between 2015 and today, so having made money isn't necessarily a sign of a good decision. 

While we haven't had one in a while, cash flow protects you against protracted downturns.  You don't get that protection with negative cash flow.   While it is better to be lucky than good, I find if I make good decisions, in the long run, I am luckier.