5 Reasons Your Rental Property Is Not Cash Flowing

by | BiggerPockets.com

I have said it before and I will say it again, positive cash flow is the most important thing to a buy and hold investor.

Without positive cash flow, your time as an active real estate investor will be limited. So why is your property not cash flowing?

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Here are 5 Thoughts On Why You’re Not Seeing Cash Flow

1. You Paid Too Much

In real estate, you make your money when you buy, not when you sell.

If you pay too much for a property you will be on a losing streak right from the get go. Paying too much is perhaps the number one reason properties do not cash flow. To avoid paying too much you really need to know and understand your market. Study it long and hard.

Look at dozens of properties before you buy. If you have already bought a property and are under water, you may want to seriously consider unloading it for a loss to stop the bleeding. Chalk it up to experience and move in.

2. Your Rents Are Under Market

Rents across the country have been going up, up, up.

Unfortunately, so has everything else such as taxes, utilities, insurance, and repair costs. Have your rents kept pace with these rising costs? If not, you may need to check to see if your rents are at current market rates.

Check local ads on Craigslist. Call nearby for rent signs and talk with other investors to determine the best market rents for your property.

Related: Is Now a Good Time to Raise Rents?

3. Your Turn-Over Is Too High

Tenant turn-over is a cash flow killer.

Long term stable tenants are a key to generating positive cash flow. To reduce turn-over, screen out frequent movers. Keep your rents in line with your local market or perhaps even a bit under market if you can.

Be attentive to tenant needs and requests. Keep your properties clean and maintained.

4. You Are Spending Too Much

Clean and properly maintained properties are a must.

But that does not mean you need to pay top dollar. Calling those service companies with the largest ads will likely end up costing you more than you need to spend.

Find and develop relationships with contractors and other service personnel that will work with investors and not charge premium (retail) rates. They can be hard to find but they are out there. Get referrals from your local REIA group or from other trusted contractors.

5. You Are Spending Too Little

Properties simply have to be maintained.

You cannot cut your way to profitability here. If you let your properties deteriorate and do not complete necessary repairs, your tenants will eventually get fed up and move.

You will have a difficult time attracting new tenants and those you do attract will not be the most desirable. Such a situation can easily send a property and a landlord in to an ever deepening downward spiral. Don’t let it start.

So remember, if you are looking for properties to buy and hold, positive cash flow is the most important thing. Purchase price is key, but how well you manage your properties and your expenses also play a role.

Related: The Key to Saving Money in Real Estate: Property Maintenance

What else do you think is a crucial aspect of having consistent cash flow?

Be sure to leave your comments below!

About Author

Kevin Perk

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.


  1. #2 and #5 can be co-related. Doing the bare minimum could cause your property to sit on the market longer, thus having to rent it out at a below market rent. This is especially true in the nicer rental areas that you and I operate within.

    • Kevin Perk


      Good point! Higher end markets come with higher standards. If your property is not up to those standards it will sit on the market for a long time. It all goes back to understanding and knowing your market.

      Thanks for reading and for the comment,


  2. Most of the time a property doesn’t cash flow is because of the reasons you mention. Often, a terrific cash flowing property becomes a money pit due to poor tenant screening and selection criteria.

    A bad tenant can take away years of profit and cash flow.

    • Kevin Perk


      We more experienced landlords have all learned that lesson the hard way. That is why we write and comment to hopefully teach others that cash flow and tenant screening are very, very important.

      Thanks for reading and for taking the time to comment. Always appreciated,


  3. Cory Binsfield on

    One of the harder lessons I had to learn was making the property right to begin with.

    I used to buy distressed properties and do the bare minimum with the intent of correcting deferred maintenance items as the cash flow came in. Unfortunately, this would create bigger problems since it’s a pain in the butt to fix major items while the unit is occupied.

    By not making the necessary repairs up front, it costs you more down the road and eats into your cash flow due to excessive service calls.

    Today, I still buy distress but ensure I have adequate cash to cover not only purchase and closing costs, but deferred maintenance. I also let units sit vacant until they can be upgraded properly.

    By investing more money up front in the beginning, I can attract more cash flow in the end by attracting better tenants.

    It’s a beautiful thing.

    • Kevin Perk


      Very good point! The cash flow never comes in. I have also learned this lesson to fix it right in the first place. It seems like you are spending a lot, but it is nothing compared when you look at what you spend over time in both repairs and lost rental income.

      Thanks for reading and for sharing,


  4. Great article! I think #1 and #3 are the absolute biggest factors. Then add to #3, not just tenant turnover but bad tenants who stop paying during their lease and before the turnover even happens, you have who knows how many lost months of rent trying to get them out of the house. Then the turnover, which includes all the repairs and cleaning and who knows what, then the vacant months while you look for a new tenant. I’ve been absolutely demolished by this exact thing with some of my properties. It’s devastating! But #1 I think is the most common that people do, but then for those who do buy smart, it’s #3 that really brings it home.

    • Kevin Perk


      Spoken like someone who has been there and done that, 🙂

      It is almost like you have to learn two separate seminars to get the positive cash flow.

      1. How to buy right.
      2. How to find and keep good tenants.

      Hopefully we can get enough folks to not learn it the hard way!

      Thanks for taking the time to read and comment. I enjoy your posts as well.


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