how do you evaluate a apartment building with negative cash flow

In Buying Property - Asked by mario s. - May 26, 2009
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Paul S.
Glendora, CA

What are you trying to evaluate if you already know it has a negative cash flow? Is there upside potential? Is there a better use? What are you trying to do?

May 27, 2009
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George H.
Lender/Mortgage Broker
West Palm Beach, FL

Negative cash flow could be based on renovations in place, or that could be done, or a tired owner ready to cash it in. Paul is right, is there an upside potential. To evaluate the value of an apartment complex, ask for my free report. Also see
George Heaslip

May 28, 2009
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Sam T.
Addison, TX

I agree with both the answers below. They are right. See your upside potential and exit plan.

May 30, 2009
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Dean W.
Oklahoma City, OK

All the properties we buy are negative cash flow. I encounter owners all the time that are in over their heads and have a negative cash flow. The question you need to ask is why does it have a negative cash flow. After you identify the problem(s) you could make your assesments based on your findings and your experience from that point. However if you are not a very savvy investor/operator and know how to turn around a property you could easily get in trouble very quickly on a project like this. This type deal may look easy but I can assure you it is not for the faint of heart or those with little experience.

Jun 2, 2009
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Stefan R.
Lender/Mortgage Broker
Herndon, VA

A building with negative cash flow should be evaluated on the cash flows from a potential turnaround. You should make sure to watch out for things like rent controls on apartment buildings which may limit your ability to increase rents even as expenses grow. I guess the main thing on a building w/ negative cash flow is why is the cash flow negative?

Jun 2, 2009
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