I've been using the BP Rental Calculator and BiggerDeals to analyze potential properties for my first investment, but I’m running into a consistent issue — most of the properties I look at are showing negative monthly cash flow and really low COC returns. I’m wondering: am I doing something wrong in my analysis, or is it just that good deals are really hard to come by in the current market? Here are the assumptions I’m using (are these too conservative?): • 5% for maintenance & repairs • 5% for vacancy • 5% for capex • 10% for property management 5% for maintenance & repairs 5% for vacancy 5% for capex 10% for property management My target price is $300K or below, and I’ve been looking in Nashville, Austin, Dallas, and Atlanta. I realize that’s a wide range of markets, but I’m trying to run as many deal analyses as possible to learn what works and what doesn’t. For those with more experience: • Do these numbers seem reasonable? • Is it normal to see mostly negative cash flow deals, or should I be tweaking my filters? • Any tips for spotting better opportunities? Do these numbers seem reasonable? Is it normal to see mostly negative cash flow deals, or should I be tweaking my filters? Any tips for spotting better opportunities? Thanks in advance — I really appreciate any feedback! Carissa

@Carissa Atendido wrote "is it just that good deals are really hard to come by in the current market?" Yes that is pretty much it. If fact good deals are always hard to find. But particularly now. We have had real estate values climbing for 15 years. We are probably near the top of a cycle. That said there are always good deals to be found. One point to consider is the type of properties you are looking at. Often new investors look in areas they would live in themselves. Properties where I would live rarely cash flow. Many people overlook rental areas because they would not normally go there or live there.

increase your down payment and see where you end up.. and or pay cash everything cash flows when you pay cash

How much down are you factoring in? I hope at least 25%. Instead of trying to see what the cash flow will look like with maintenance, vacancy, and capex, try setting that money aside for the first year. Consider it reserves that you need to have for the first year. Whenever you put all this stuff in monthly, it will could certainly be in the negative. And as an investor myself, it's best to look at investment property from an annual standpoint. Not monthly. There will some years or even longer where I don't have vacancy and maintenance. So it's really not fair to think that your these expenses will be the same exact every month. Set aside 1-2 months of rent per year for vacancy/lease up. Set aside a few thousand for repairs. Say your down payment is $50K, then add these reserves into your total capital needed to buy the property. But then again, this is just how I view it.

Yes, but even with very little appreciation, if you are leveraged 1:4 and the market goes up 3% that is 12% ROI on your downpayment. And if your tenant pays down your mortgage, that is another 3% on average (a bit oversimplified), giving you another 12% on your down payment. Okay, that is equity and not cash flow, but net worth nonetheless. Nichols Crown (known for hisRich People vs Really Rich People tiktok) said the other day: the stock market is not for making money. It is for investing the money you already made, protecting the principal first and ideally generating steady returns on top. Nobody becomes a millionaire in a few years, starting out with 10k, yet a lot of people try it. Thinking about it, it is really fascinating to me how many people have that dream of becoming rich by picking that one stock that rises 10,000%. (Have to admit, I was one of them back in 1999 LOL). Meanwhile, army's of seasoned investment bankers spend millions on a faster fiber-optic connection to NYSE because 1-millisecond shorter latency allows them to improve their trades by 0.01%.. but Johnny thinks he can outperform them all with his Robin Hood app by a factor of 1,000. The notion of investing 50k into real estate and growing it into an empire is a pipe dream, at least since after 2015. But on the other hand, even that one single duplex you bought 30 years ago would provide a really nice supplemental retirement income today. Even if it took 5 years before it started to cash flow a little.

Hey Carissa, it can be super frustrating to run deal after deal and keep seeing negative cash flow. Your assumptions — 5% repair, 5% vacancy, 5% capex, 10% management — are totally fine. That’s actually what most experienced investors would use. The issue is mostly that prices in these areas have gotten so high that it’s tough to make the math work without finding something off-market, making a big value-add, or going into a different niche like midterm or short-term rentals. If you’re set on traditional long-term rentals and want better cash flow, you might look at slightly smaller markets nearby, or focus on duplexes/tri-plexes where the numbers tend to look better. Another option is to look for properties you can buy at a discount (e.g. fixer-uppers, pre-foreclosures, etc.), so you build in equity and lower your all-in basis. Bottom line — most new investors feel this way in today’s market. You’re not doing anything wrong. Keep at it and maybe widen your search a bit; eventually you’ll spot a deal that pencils out.

Right now what I am seeing is lower rents compared to sales prices. We've had a very quick runup in sales prices, and rents grew slower. That will probably flip in many markets over the next 4-5 years. So right now you may need to put down 30-40% if you need cash flow. Also there are opportunities like conservering your cash and getting 100% VA vendee financing on VA foreclosure and to use your cash reserves on the negative cash flow each month, until rents come up. Plenty of people manage themselves long distance, so maybe cutting the PM fee and managing yourself in the beginning will help your numbers. Best wishes and good luck

@Carissa Atendido You are looking in the most expensive markets as those cities have really spiked in the last 10 years, more than the national averages. Look at a little less “sexy” cities and you might find “sexy” cash flow. Indianapolis, has also seen a price spike like everywhere else in the country, but not as much as the places you are looking. Also, duplexes and small multi family usually don’t cost double and get near double in rents. So check the cost per rent ratios on small multi family. Good luck!

Hey @Carissa Atendido - Good question, and you're on the right track by running numbers and looking across multiple markets. With high interest rates and elevated home prices, it's very common right now to see negative or low-cash-flow deals — especially when using realistic expense assumptions like yours. You’re not doing anything wrong; it’s just that cash flow is harder to come by without some kind of value-add or creative strategy. Lately, we’ve been working with investors to shift focus toward properties with strong value-add potential — things like under-market rents, cosmetic rehab, or opportunities to convert to mid-term or short-term rentals. In this market, the reality is that the first year or two might involve carrying some costs month to month. That can still be worth it if you’re building equity, setting up better future cash flow, or gaining tax advantages. The truth is, investors don’t usually find great deals — they create them. But more importantly, waiting around for the perfect home run deal can leave you stuck on the sidelines. Sometimes it’s better to focus on getting that first base hit— a solid learning experience with options to grow and pivot. The first deal is where you sharpen your instincts and build momentum. Hopefully you are able to find a property to kick things off!

All NEGATIVE cashflow when analyzing trying to buy my FIRST deal - WHY???

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All NEGATIVE cashflow when analyzing trying to buy my FIRST deal - WHY???

Carissa AtendidoPro Member

Member since 2025 · 53 posts · 37 votes

I've been using the BP Rental Calculator and BiggerDeals to analyze potential properties for my first investment, but I'm running into a consistent issue — most of the properties I look at are showing negative monthly cash flow and really low COC returns.

I’m wondering: am I doing something wrong in my analysis, or is it just that good deals are really hard to come by in the current market?

Here are the assumptions I’m using (are these too conservative?):

5% for maintenance & repairs
5% for vacancy
5% for capex
10% for property management

My target price is $300K or below, and I’ve been looking in Nashville, Austin, Dallas, and Atlanta. I realize that’s a wide range of markets, but I’m trying to run as many deal analyses as possible to learn what works and what doesn’t.

For those with more experience:

Do these numbers seem reasonable?
Is it normal to see mostly negative cash flow deals, or should I be tweaking my filters?
Any tips for spotting better opportunities?

Thanks in advance — I really appreciate any feedback!

Carissa

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Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

@Carissa Atendido here's some info that may require you to adjust your expectations.

The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.

This couldn't last forever, and it didn't, as excited new investors drove up prices.

Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.

So, the flood of new investors switched to buying Class B properties.

COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!

Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).

Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.

In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.

If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.

Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results.

In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:

FICO Score	Pct of Population	Default Probability
800 or more	13.00%	1.00%
750-799	27.00%	1.00%
700-749	18.00%	4.40%
650-699	15.00%	8.90%
600-649	12.00%	15.80%
550-599	8.00%	22.50%
500-549	5.00%	28.40%
Less than 499	2.00%	41.00%

Source: Fair Isaac Company

According to this chart, investors should use corresponding vacancy + tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.

To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.

Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.

We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.

Logical Property Management4.9454 Reviews

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Aristotle Kumpis
Specialist · Long Beach, CA · Member since 2011 · 877 posts · 398 votes
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How much down are you factoring in? I hope at least 25%. Instead of trying to see what the cash flow will look like with maintenance, vacancy, and capex, try setting that money aside for the first year. Consider it reserves that you need to have for the first year. Whenever you put all this stuff in monthly, it will could certainly be in the negative. And as an investor myself, it's best to look at investment property from an annual standpoint. Not monthly. There will some years or even longer where I don't have vacancy and maintenance. So it's really not fair to think that your these expenses will be the same exact every month.
Set aside 1-2 months of rent per year for vacancy/lease up. Set aside a few thousand for repairs. Say your down payment is $50K, then add these reserves into your total capital needed to buy the property. But then again, this is just how I view it.
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Ned CareyPro Member
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
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@Carissa Atendido wrote "is it just that good deals are really hard to come by in the current market?"

Yes that is pretty much it. If fact good deals are always hard to find. But particularly now. We have had real estate values climbing for 15 years. We are probably near the top of a cycle. That said there are always good deals to be found.

One point to consider is the type of properties you are looking at. Often new investors look in areas they would live in themselves. Properties where I would live rarely cash flow. Many people overlook rental areas because they would not normally go there or live there.
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