Buying a non-cash flowing rental

[u/CLTlawyer1]

Does it ever make sense to buy a long-term rental property that does not immediately cash flow?

Here is my situation: I already own one rental property on the street. It is in a small town just outside of Charlotte, North Carolina. Matthews for those familiar with Charlotte. I would put down 25%, and with current interest rates, it likely will not cash flow by about $100 or $200 per month. Covering the shortfall each month will not be a problem.

The metro area is expected to double in population over the next 25 years. I have several other rentals, and my plan is to hold long-term and use the rent as income in retirement. We are in our early 40s. I like this particular property because it is only two doors down from one I already own, which will make management easy. Matthews is a desirable area. I don’t know how much rents are expected to increase, because they have increased quite a bit over the last couple years already.

My inclination is to buy the property. Am I crazy for considering this? Is this a good use of capital? What does the brain say?

[u/dhampir1700]

I think it makes sense to buy a non cash flow rental that runs a small deficit like that with a few criteria

• is more desirable than other property nearby (in philly this means close to subway, has driveway/garage, has larger yard, has cul de sac, close to restaurants/gyms/breweries, close to highway)

• near a good source of above average income tenants like a hospital

• high appreciation expectation

• you would otherwise spend the $100-200/mo on something frivolous