New construction duplex / no cash flow

1 Reply

Hey guys, im a new motivated investor,i am 20 year old and im looking to buy a rental property in the future but where i live 90% of the rentals do not cash flow and if they do, they are D class property or non-legal/non-conforming duplex/triplex. So because of that im looking to buy my dad's land and build a duplex on it, one of my uncle has been doing this for around 8 years and already has 6 duplexes built, he's getting negative cash flow or break-even if lucky on his units, ive heard cash flow is important when buying rentals units but all he get is pretty much 50k-100k equity when built and mortgage pay down from his tenants and good appreciation, is it worth it for me to build a new duplex if i need to withdraw 100-200$ a month to pay for my negative cash flow each month?

-Thanks

@Nicholas Gour - If you build a duplex that you need to pay $100-$200 for each month, you have built yourself a liability. You're going to pay $100k+ to have a property take $100-$200 from you each month. This makes very little sense. 

The only way for you to truly make money on this property is through appreciation, which is essentially gambling, but a lot more work. 

Unless you have some insider knowledge or an extremely high degree of confidence this property will appreciate, I suggest sticking to properties that cash flow. 

P.S. - Great that you are getting started on this so early in life! Keep it up! 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

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.

We hate spam just as much as you