Buying a Property with Negative Cashflow

[Kalp Mehta]

Hello BP

Should I buy a property that generates negative monthly cashflow including vacancy reserves, management reserves, CapEx, and property management fee? When I remove vacancy reserves, management reserves, CapEx, and property management fee from the calculation the property is generating $200 positive monthly cashflow.

[Matthew Kwan]

You would want to make sure your first few deals has an acceptable of return in order to lower your DTI and expand your investment portfolio in Real Estate. However, you could still have - cashflow on paper, but still break even or potentially have + cashflow on your taxes. Lenders will use your tax returns schedule E to calculate your monthly rental income. The goal is to show that you are not making money in the lens of the IRS, but also making sure that you can + cashflow in the lending world.

@Albert Bui @Carlos Valencia