Is it good idea to have rental property with negative cash flo?

Question

I have a house which can rent for 1800 dollar and my mortgage payment is 2500 dollars is it a good idea to keep this property till prices bounce back since we had 10% drop in california

Answer 1

Where do you live now? I would suggest that you live in the house and pay that mortgage...... if you have another house or are renting, then you add 700 a month to your expenses not including vacancy rates or maintanence issues. I would live in the house and pay off the mortgage instead.

Answer 2

I wouldn't...but then again I am no gambler.
Income property should generate income. If there is a 10% drop in housing prices then there is no demand. I think prices have peaked and beyond the average person's ability to pay or their comfort zone has been tapped. I love California but could not afford to live there again and that said, where are the young folks going but to a place they can afford. There doesn't seem to be payoff it once was in the Golden State..

Answer 3

That's quite negative indeed. But California is weird, and if you can stand the expense for a few years, you could make out. Consider selling it, and buying a cheaper property with better cash flow numbers.

Answer 4

How did you get talked in to this?? Do you like the sound of 700 each month going the toilet.

Cut your losses find out what is will cost to get out of that pocket drain, the market will not be going up for a long time. See why.
http://www.breakingbubble.com/index.htm

Answer 5

There are so many places to rent in Cali, so I would take what you can get on the rent for now, and then maybe in the future, raise the price to what you need.

Answer 6

if u can cover the deficit hold because the return on capital is likely more than u will make with the money u get in the bank.. to be sure work out the cap rate and compare it to what u can get for your equity elsewhere

Answer 7

you also get a depreciation deduction on your taxes

Answer 8

i has no idear.