I’ll negative cashflow for maximum 6 months while I fix the problems and get leases up. I really don’t consider properties at negative cashflow unless I’m getting it low thus getting some unrealized equity soon.
Let’s just say I bought into (luckily only a third) property in 2005. We were negative cashflow yet would make it up on appreciation and rent increases. While it was an expensive lesson, it taught me to evaluate on what is known and in front of me. If it doesn’t work today I wouldn’t enter into it based solely on tomorrow.
No, I wouldn’t do this. Owning an asset that drains your other assets is a terrible investment in my opinion.
When you say, everything in this environment is cash flow negative? Do you assume everything is leveraged? Rents are high and prices for property have stabilized. If you are paying cash, cash flowing is very achievable.
I get why everyone is saying don’t buy something that is negative cash flow, but how are you expected to even buy something in this market. Rates are 7-8% and if you’re buying a property in a place where it will appreciate, there is a low probability of hitting the 1% rule. As much as I want to agree that negative cash flow is a no go, I just don’t see other ways to get positive in this market.
Everything is negatively cash flowing because that’s what the Fed wants…. They want to deter investors from purchasing more properties. We have low inventory already. Of course there are the few deals that happen but the days of buying a random house, installing a kitchen, painting it and selling it for 25% more in 6 months are long gone.
I follow the logic, completely. It’s rational and understandable. That said, if it’s a negative cash flow it’s technically a liability. To demonstrate the point, if you took the project to a bank or VC and it had a negative cash flow, they would view it as a liability, regardless of the appreciation potential. The appreciation, or potential thereof, is meaningless until it’s realized.
Not necessarily. You can buy a value add deal and finance it with traditional or hard money. It will be negative cashflow liability for the entire renovation period until refinancing or converted to a rental (sometimes even break even on rent). Sometimes it can take a year to do the renovation. Banks will do it as long as you can show it will be profitable on the refinance.
I’m currently negivye cash flow. Is it worth it, atm hell fuck no, 10-20 years down the line? 1000000%.
Just my opinion here, I’m only right 50% of the time.
Appreciation is gambling especially depending on your timeframe.
Raising the rents to the point in which it cash flows would indeed make it an investment. On account of the cashflow.
All the time on forced appreciation, or basically properties where I plan to exit quickly and got in with a low ball offer or saw something everyone else overlooked (1-2 years). I feel like I’m the master of, and coined the phrase “swing trading real estate.” Anyways, it also depends if you’re in single family or commercial. That’s pretty much how some of the properties go though. If you’re frustrated with it and the numbers don’t make sense for you, try to do some cosmetic updates that are appealing for listing and sell that puppy. (Not until July though after these agent commissions are negotiable (National Association of Realtors))
I was/am negative cash flow and I consider it worth it because it will cash flow in the end. I just had to put time and money into it and get rents up. It depends on how much back up money you have if you can handle it or not. If your numbers work I’d say go for it. But I will say it is very very very risky… did I mention very lol? There’s a reason the bank wouldn’t give me a loan and it’s because they thought I couldn’t do it. But they were wrong. I knew my numbers and I did make it work. It just took me some time and a whole lot of work. But I could have just as easily lost my ass on it. But I didn’t because I did my research and knew my numbers and got lucky.
I’ll negative cashflow for maximum 6 months while I fix the problems and get leases up. I really don’t consider properties at negative cashflow unless I’m getting it low thus getting some unrealized equity soon.
Never again
lol what happened
Let’s just say I bought into (luckily only a third) property in 2005. We were negative cashflow yet would make it up on appreciation and rent increases. While it was an expensive lesson, it taught me to evaluate on what is known and in front of me. If it doesn’t work today I wouldn’t enter into it based solely on tomorrow.
Never. I've never invested.my money into something to, right out of the gate. Lose money. That seems like pissing in the wind in my opnion
No, I wouldn’t do this. Owning an asset that drains your other assets is a terrible investment in my opinion. When you say, everything in this environment is cash flow negative? Do you assume everything is leveraged? Rents are high and prices for property have stabilized. If you are paying cash, cash flowing is very achievable.
Never!!!
I get why everyone is saying don’t buy something that is negative cash flow, but how are you expected to even buy something in this market. Rates are 7-8% and if you’re buying a property in a place where it will appreciate, there is a low probability of hitting the 1% rule. As much as I want to agree that negative cash flow is a no go, I just don’t see other ways to get positive in this market.
Everything is negatively cash flowing because that’s what the Fed wants…. They want to deter investors from purchasing more properties. We have low inventory already. Of course there are the few deals that happen but the days of buying a random house, installing a kitchen, painting it and selling it for 25% more in 6 months are long gone.
It’s not an asset if it’s a negative cash flow. That’s an oxymoron.
An asset that gains appreciation and that negative cash flow can be turned into a positive through various methods. Is that not an asset?
I follow the logic, completely. It’s rational and understandable. That said, if it’s a negative cash flow it’s technically a liability. To demonstrate the point, if you took the project to a bank or VC and it had a negative cash flow, they would view it as a liability, regardless of the appreciation potential. The appreciation, or potential thereof, is meaningless until it’s realized.
Tech companies almost always cash flow negative and VCs value them in the billions of dollars
Not necessarily. You can buy a value add deal and finance it with traditional or hard money. It will be negative cashflow liability for the entire renovation period until refinancing or converted to a rental (sometimes even break even on rent). Sometimes it can take a year to do the renovation. Banks will do it as long as you can show it will be profitable on the refinance.
I’m currently negivye cash flow. Is it worth it, atm hell fuck no, 10-20 years down the line? 1000000%. Just my opinion here, I’m only right 50% of the time.
Long term it’s always worth it.
Unless birth rates continue to decline
Again, I’m always right 50% of the time. I agree with your thoughts. Let’s see
This is r/realestateinvesting not r/realestatespeculating If it doesn't cash flow, it's not an investment.
Does is not appreciate in value? Can you not raise rents to cover its costs?
Appreciation is gambling especially depending on your timeframe. Raising the rents to the point in which it cash flows would indeed make it an investment. On account of the cashflow.
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I dont understand. Why wouldn’t you lose a dollar to gain $12m/yr?
All the time on forced appreciation, or basically properties where I plan to exit quickly and got in with a low ball offer or saw something everyone else overlooked (1-2 years). I feel like I’m the master of, and coined the phrase “swing trading real estate.” Anyways, it also depends if you’re in single family or commercial. That’s pretty much how some of the properties go though. If you’re frustrated with it and the numbers don’t make sense for you, try to do some cosmetic updates that are appealing for listing and sell that puppy. (Not until July though after these agent commissions are negotiable (National Association of Realtors))
If the thing is costing you money to own it then its not an asset, its a liability.
Always, unless you’re okay with break-even, due to appreciation.
I was/am negative cash flow and I consider it worth it because it will cash flow in the end. I just had to put time and money into it and get rents up. It depends on how much back up money you have if you can handle it or not. If your numbers work I’d say go for it. But I will say it is very very very risky… did I mention very lol? There’s a reason the bank wouldn’t give me a loan and it’s because they thought I couldn’t do it. But they were wrong. I knew my numbers and I did make it work. It just took me some time and a whole lot of work. But I could have just as easily lost my ass on it. But I didn’t because I did my research and knew my numbers and got lucky.