BiggerPockets Real Estate Podcast

949: Seeing Greene: Is Losing $800/Month in Cash Flow Worth $200K+ Equity?

11 snips
May 7, 2024
Exploring the dilemma of buying a cash-flow negative property with $200k equity upside, raising rents for long-term tenants, managing capital gains in property sales, transitioning from cash-flowing to appreciating assets, and optimizing real estate investments for higher returns.
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INSIGHT

When Negative Cash Flow Is Worth It

  • Buying a property with negative cash flow can be worthwhile if it has significant equity and appreciation potential.
  • Market appreciation and principal paydown are key to building long-term wealth despite short-term losses.
ADVICE

Manage Portfolio for Risks

  • Balance your real estate portfolio with some cash-flowing properties to offset losses from an appreciating property.
  • Live below your means or have other income streams to safely hold a temporarily negative cash-flow asset.
ADVICE

Set Baseline to Raise Rent

  • To raise rent on a long-term tenant, first set the market rent baseline with comparable listings.
  • Offer a discount below market rent to make the increase feel reasonable and fair to the tenant.
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