property with negative cash flow

property with negative cash flow

97006 · Member since 2018 · 23 posts · 3 votes

I am first time looking to buy a residential condo in Orenco station area Hillsboro for $290K, which rents for $1700. But when i put in the numbers, the online calculator shows negative cash flow. I was thinking that if someone else pays down my mortgage, it should always be no brainer but seems like people in this forum always insist on positive cash flow. I have a great paying full time job which i hope to continue another 20 years. Then why is it a bad idea to buy property with negative cash flow. 

http://www.calculator.net/rental-property-calculator.html?cprice=290000&cuseloan=yes&cdownpayment=35&cinterest=4.75&cloanterm=30&cothercost=3000&cneedrepair=no&crepaircost=10000&cafterrepairvalue=150000&ctax=3700&ctaxincrease=3&cinsurance=800&cinsuranceincrease=3&choa=4800&choaincrease=3&cmaintenance=2000&cmaintenanceincrease=3&cother=200&cotherincrease=3&crent=1600&crentincrease=3&cotherincome=0&cotherincomeincrease=3&cvacancy=5&cmanagement=0&cknowsellprice=no&cappreciation=3&csellprice=200000&cholding=20&csellcost=6&printit=0&ctype=&x=121&y=22

0Reply
57 views

Most Popular Reply

Leclaire, IA · Member since 2016 · 161 posts · 130 votes
8y
None of these comments were to discourage you but they are reality. Keep searching for a property that at least meets the 1% rule.
See this reply in the discussion

27 Replies

Jump to latestLatest
  • San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    8y

    @Kundan Chand Having negative cash flow isn't a good situation because it limits the amount of properties you can buy. Ideally, the property should be able to pay for itself if bought correctly. Good luck! 

  • Rental Property Investor · Justin, TX · Member since 2017 · 134 posts · 57 votes
    8y

    Two words: opportunity cost. If you are looking hard enough, you will eventually find a deal you can stomach a lot better with positive cash flow. And what happens when unforeseen expenses come your way? You don't want to strike out before you even start playing the game. Negative cash flow is just an extra expense that you don't get much benefit from at the end of the day. 

Join the conversationCreate a free account to reply, vote on answers and follow this thread.