Re: How much negative cash flow is acceptable? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 01, 2003 at 09:24:37:
I think you are doing fine. You are doing real estate investing the “right way,” in my opinion. If you have not read it, you might want to read my advice for beginning real estate investors, although you may not need it. However, it might stimulate your thinking. You find it by putting “beginners success” into the search function at the top of this main board of this CREONLINE.COM web site.
You sound like you bought at a very good price.
I think that, if you can take advantage of the tax beneifits, after income taxes you will find that your negative is down to about 0.80 to 1.15 of one percent of your purchase price.
Here in Coastal CA, one should be prepared to trade off negative cash flow for appreciation, in my opinion. Otherwise you either have to buy at bargain prices for quick resale or else go to other areas to buy for long-term rental positive cash flow.
Lyal’s view is, in my opinion, not as applicable in CA as it is in most other parts of the country. It is not “wrong,” but if you follow it, you will probably never buy rental properties in Coastal CA.
Other investors in your area? Probably only a couple of hundred thousand. However, real estate investing tends to be somewhat invisible. People don’t know you are a real estate investor unless you tell them.
Are you an attorney? I thought only attorneys could become real estate brokers in CA without a couple of years experience as a saleperson under a licensed real estate broker.
Good Investing**Ron Starr