Reply to Why are people so obsessed with rental properties yielding positive cash flow?

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[quote=Anonymous][quote=Anonymous]I'm not a professional landlord, but over the years I've had three rental properties (a condo in Logan, an English basement in my primary residence, and a townhouse in NOVA).  I've never had a positive cash flow in any of them when IRS-required depreciation is taken into account, and that's fine with me.  It means I'm not paying any income taxes on the rental income because technically I'm operating at a loss.  But the value of my rental properties is increasing every year.  That's what RE investing is all about.  The tax laws encourage losses.  How do you think Trump got so rich?  As much as I hate him, I know from personal experience on a much smaller scale that most of what he's done in the RE business is perfectly legal.[/quote]

Your response makes no sense. Clearly you are not a professional landlord! If you charged $1000/mo more in rent for the property you'd still be depreciating and you'd still be getting money without paying taxes on much of the revenue. And you' still have appreciation. Those concepts are not mutually excusive from cash flow. You'd just have $1000 more in income per month. Would you be paying taxes on it? Sure. But if you wouldn't want to net another $8k/yr after taxes then you need to take a basic finance course.

One other thing you should make sure you understand (because based on what you posted, you clearly don't!) Depreciation is on the front-end, recapture is on the back end. If your real estate investing model is based only on appreciation you are going to be in a world of hurt when you go to sell and find out that 25% of the depreciation is now taxable.       [/quote]

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