Posted by Robert Staats on September 17, 2003 at 15:39:34:
While some real estarte gurus will say negative cash flow can be OK, I personally stay away from it. There are other deals where cash flow is positive, plus you still get equity buildup. An exception could be where you firmly believe equity buildup in the condo would far exceed other opportutities, plus of course you can afford the negative cash flow. I would sharpen my pencil a bit, though, to carefully estimate what your cash flow will be. Nail down the expected rent figure more. And make sure to include maintenance costs and a vacancy factor.
Re the mortgage, I would put a first mortgage on the condo, as the rate should be less than a home equity line (of course verify that first - I am less familiar with condo mortgage rates).