23 Ways to Solve your Negative Rental Cash flow and turn it positive
2015 was a difficult year for my real estate investments. I started the year taking a sabbatical from my government job, and shortly after I ended up quitting. I planned on relying on the property investment cash flow to help pay for my living expenses, but it didn’t work out so well. The rental cash flow was too unreliable. Sometimes I received a paycheque from my real estate investment properties and other times, I had to return the paycheque to pay for roof repairs, cover vacancies, a new roof, two tree trimmings, and regular maintenance.
Every real estate investor looking to amass a portfolio of properties has dreams of growing the equity in their investment properties through appreciation, cash flow, and mortgage pay down. It would be nice to have linear growth over time but the reality is that the real estate market actually looks like this:
There are dips in the real estate market and it takes time to recover, at least two years as shown above.
Negative rental cash flow happens when the expenses on the property exceed the amount of revenue (rent) the property is generating. The larger the portfolio, the more likely you will be experiencing this from time to time. This is the reality of real estate investing. It is no different than seeing your dividends go down when a stock is struggling with a plunging stock price and/or declining earnings in a tough market. As shown in the graph below, there have been 8 recessions in the stock market.