I have ran across people that have been advertising purchasing propeties with negative cash flow, mainly because they will appreciate in value, you are paying down the mortgage, raising rents, etc.
It's one thing to own 2-3 properties that are negative $200-$300/month, but when you end up with 20-25 properties negative each month, it's not a good thing! I have seen this happen to many investors. In fact, I recently met someone that purchased a "package" deal of properties from another investor. Not in great areas, and not much cash flow at all. In fact, no cash flow when you include vacancy allowance and repair allowance. They have tried to sell properties, but found out that they purcased the properties for 25% markup to what they were really worth.
I learned earlier in my career to make sure you have cash flow. I originally purchased my properties on 15 year notes. I thought it made sense to pay off everything as quickly as I could. That is great, but no cash flow. And lenders like cash flow more then they like the logic of paying things off quickly. My philosophy now is to pay as little as I can and spread it out for as long as I can. This allows you the cash flow to proceed with future investments.
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