From: "iNet" 
Newsgroups: misc.invest.real-estate
Subject: Re: Is positive cash flow possible?
Date: Mon, 21 Mar 2005 20:42:00 GMT


 wrote in message 
news:1111434346.789994.127270@l41g2000cwc.googlegroups.com...
> I'm very interested in getting into real estate investing. Only I don't
> see how I can get positive cash flow. A decent 1 or 2-bedroom condo
> where I live goes for about $150,000 (i'm targeting students at a local
> college, so I know if I get a condo near a bus line I should have no
> problem getting tenants). If I took out a 30 year loan at 5% (the rate
> for an FHA 3/1 ARM home loan. I know this might increase [or decrease]
> after the first three years, but I'm interested in getting a positive
> cash flow from the start, so this is the lowest rate FHA has for the
> first few years). According to a mortgage calculator, this would put me
> at monthly mortgage payments of just over $800. Then I add on $150 a
> month for HOA fees (which include A/C and hot water and heat and
> everything), plus taxes, plus property managment, plus probably other
> stuff.... problem is that I could probably get this place to rent out
> for only around $1000 a month. Just mortgage and HOA (utilities) are
> $950, plus another $100 (assuming 10%) for property management (I'm not
> gonna deal with landlording), I'm into negative cash flow and haven't
> even taken into account taxes and other things. Am I doing these
> numbers right? What could I do to get into positive cash flow?
>

Hint: Yes, you are in the negative regarding cash flow - and you have used 
no cash to invest.  You are trying to calculate your return on investment 
when you are making no investment.