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BiggerPockets Real Estate Podcast

949: Seeing Greene: Is Losing $800/Month in Cash Flow Worth $200K+ Equity?

BiggerPockets Real Estate Podcast

BiggerPockets

Education, Investing, Business

4.816.6K Ratings

🗓️ 7 May 2024

⏱️ 48 minutes

🧾️ Download transcript

Summary

Would you buy a rental property that loses money every month? What if, in a few years, that one property could make you hundreds of thousands of dollars? Would the negative cash flow be worth the massive appreciation upside? Today, we’re answering that exact question from an investor who could be sitting on a wealth-building opportunity but doesn’t know what decision to make. Should he buy the "bleeding" property at a steep discount or give up this needle in the housing market haystack to avoid a cash flow trap? Let’s find out! We’re back on Seeing Greene as David and Rob, your go-to real estate investing experts, answer questions directly from BiggerPockets Real Estate listeners like you! First, an investor has a rare opportunity to buy “Grandma’s house” with over $200K+ in potential equity upside. The problem? It will LOSE $800/month! Next, a new property manager wants to know how to raise rents on a twenty-year tenant. Do you pay capital gains on the profit of your home sale or the entire amount? We’ll show you how to know how much you owe. Then, an investor debates selling his C-class cash-flowing properties in exchange for appreciating assets, and we explain the “sneaky rental” tactic that’ll take you to ten rental properties in no time! Want to ask David a question? If so, submit your question here so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can jump on a live Q&A and get your question answered on the spot!  In This Episode We Cover Negative cash flow and one of the ONLY times it makes sense to buy a “bleeding” rental How to raise rents (the right way) on a long-term tenant  Capital gains tax explained and how much YOU could owe on your next home sale Whether to trade cash flow for appreciation and selling your rentals that don’t have room to grow  The “sneaky” rental tactic that allows you to scale a real estate portfolio FAST  And So Much More! (00:00) Intro (01:23) Losing $800/Month to Make $200K? (11:59) Raising Rents On 20-Year Tenant (21:28) Comment Section & Capital Gains 101 (25:47) Trade Cash Flow Portfolio for Appreciation? (33:05) The "Sneaky Rental" Tactic (38:20) Ask Us Your Question! Check out more resources from this show on BiggerPockets.com and  https://www.biggerpockets.com/blog/real-estate-949 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

This is the Bigger Pockets Podcast Show 949.

0:05.0

What's going on everyone?

0:06.0

This is David Green, you are host of the BiggerPockets podcast.

0:09.0

Today we have episode 949, and if you don't know what a palindrome is, go check out Google because you're in one right now.

0:16.1

We've got a great show for you on seeing green episodes.

0:18.8

We get into listener questions from you, our base.

0:21.9

We're going to be talking about what you could do to build

0:23.9

wealth through real estate with Rob adding his little spice into the

0:27.8

seasoning. Rob how are you today? Oh you know sounding like a gremlin because I

0:32.3

lose my voice so easily after I go to

0:34.1

conferences but I'm hanging in here man and I'm excited to answer some questions.

0:38.0

Yeah we got some really good one so in today's show we get into a lot of different things, including how to allocate capital

0:44.7

when you've got a bunch of properties, but they're not performing super well.

0:48.8

What asset classes you can consider moving into if the one that you're in right now is struggling.

0:53.2

How capital gains work and how you can use a cash out refinance to sort of get money out of properties

0:59.8

tax-free.

1:00.8

And we start to show off with a great question about if somebody should buy a property

1:05.1

that they know is not going to cash flow when they first buy it. All that and more in

1:09.8

today's seeing green. And most importantly if you want a chance to ask your question,

1:14.6

please head on over to bigger pockets.com slash David.

1:18.1

The link is in the description down below.

1:20.0

Pause this, send us your questions, and let's jump back in.

...

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