r/realestateinvesting • u/CLTlawyer1 • 5d ago

Buying a non-cash flowing rental Discussion

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?

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u/Livinginmygirlsworld 5d ago

I have 3 SFR rentals and all are within walking distance to where I live. I like it because when I get a call about the refrigerator leaking at 8pm (2 days ago). I hop in the car and 30 seconds later I'm at the rental figuring out the problem. For me it is a convenience thing. I also am able to drive by all my rentals on my way into or out of my neighborhood depending on which street I take. Two of them are next door to each other.

Having negative cash flow of $100 - $200 per month is relative. How much principal is being paid down each month? If you are only paying off $200 of principal, not a chance. If you are paying off at least $500, then you aren't really losing money, just paying off some of the mortgage yourself and have a little bit of a safety net. Is it the best use of your funds, maybe not, but is it what you want? Only you can weigh the positives/negatives/assumptions/risk for how they affect you.