What Is “Negative Cashflow”?
August 28th, 2008 By Peter G. Miller
When real estate is bought for investment purposes, investors seek appreciation and a positive cashflow — a higher value over time and cash profits each month.
But, it sometimes happens that rental properties produce a negative cashflow — they lose money every month, or they lose money every so often.
A property with negative cashflow is not necessarily a bad investment if the value can reasonably be expected to rise, or if expenses can be lowered and rents raised to produce a positive cashflow over time.
Properties with neg am don’t work, however, if the investor does not have the cash to cover costs.
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