No cash flow investment?

9 Replies

@Pablo Luna

Would you be losing money? If so then i would say no.

It depends on what your goals are in real estate but I think you could find a deal that cash flows depending on your market.

@Cody Neumann it would be my first deal to start the ball rolling. Rents on other units are under market. There is value to add on cosmetic improvement. So won't cashflow until I move out after 1st year and rent out the unit I will be moving in to.

Really depends on your situation and your goals. It is not unheard of to not cash flow until the 2nd year- we feel better about deals that cash flow the first year since we bring on passive investors. However if you are buying the deal yourself, and you are willing to to take on that risk, why not. Best of luck!

Cash flow is always good but if you are breaking even, that is not a bad thing either. You have figured out that you can value add to the investment to make money. Even if you are breaking even with payments you are making money, the tenants are helping to pay down the mortgage creating equity for you not to mention depreciation on the tax end 

Cashflow doesn’t matter. Will you be better off financially than if you don’t buy it?

Imagine you buy it and don’t move in. It flows $800/mo and all the cashflow gurus give you their blessing. Meanwhile you’re paying $1600 in rent. But if you buy it and move in it only “breaks even”. Of course you’re saving $1600 in rent, but they don’t count that. They also don’t count the $600/mo you’re paying down the loan. 

I swear if you gave them a negative amortization loan that cashflowed they’d be giddy. Even if the negative amortization was more than the cashflow. 

What’s the cashflow on your retirement account or the place you’re renting? Unless you think properties will be cheaper within a year than today there’s no reason this isn’t better than renting. 

If we would have known more from the beginning I don't think we would have made the same decisions. With that being said, we bought a 3 family that did not cash flow while we lived there (about 2-3 years). However, we had loan pay down from our tenants, we now have $32,000 HELOC available to us, and my boyfriend was able to go back to school and take a year off of work. Definitely depends what your goals are! Now the property cash flows really well with us gone and our area is booming right now (much like everywhere else), good luck!

@Bill Brandt 😂😂😂 I love it cashflow is great don't get me wrong but people forget the calculate the other 7 billion ways you can make money from real estate. I like to go by how long to have my money back from a property ROI being second. The ROI from house hacking is very good normally over 100% when you consider what you would be saving from rent.

@Pablo Luna

Most house hacks in CA are this way and they’re a huge win even if they don’t cash flow immediately.

Reason being is that our rents increase more than most markets each year and our appreciation rate is usually double that of the national average.

Most investors that house hack in CA are just trying to lower their cost of living, avoid paying high rent while using renters to help pay down their mortgage on an asset that’s appreciating at a higher rate than the interest they’re paying on the loan.

My suggestion would be to purchase the house hack knowing that you’ll likely be cash flowing after a year or two of living there and then moving out and renting all the units. You’ll build equity much quicker that you can then leverage to buy another house hack, rental property, or do a bigger deal.

It all starts with the first house hack. My first house hack didn’t cash flow right away but did after 2 years of living there. Then we were able to leverage the equity to buy a portfolio of rentals. My advice would be to go for it because what you’re describing sounds like a great deal.

I hope that helps!!