biophase
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Re: Shoul I buy in a rough side of town for cashflow or..........
I would not choose a poor neighborhood just for cashflow. There are many reasons for this:
Cashflow is only there when you have a tenant
Cashflow is only there when you have a "paying" tenant
Bad neighborhood rentals tend to need alot of upkeep and maintenance
There is no appreciation potential
When you sell, you'll lose 6% and with no appreciation it comes out of your cashflow (assuming you had some)
Example: Bought for $50k, cashflow $200/mo. Sell for $50k, after commissions and closing costs you may get $46k back. Loss of $4,000 on the sale equals 20 months of positive cashflow to break even. Add in some vacancy and minor repairs and you're looking at 3 years to just break even.
I would not choose a poor neighborhood just for cashflow. There are many reasons for this:
Cashflow is only there when you have a tenant
Cashflow is only there when you have a "paying" tenant
Bad neighborhood rentals tend to need alot of upkeep and maintenance
There is no appreciation potential
When you sell, you'll lose 6% and with no appreciation it comes out of your cashflow (assuming you had some)
Example: Bought for $50k, cashflow $200/mo. Sell for $50k, after commissions and closing costs you may get $46k back. Loss of $4,000 on the sale equals 20 months of positive cashflow to break even. Add in some vacancy and minor repairs and you're looking at 3 years to just break even.