What Is “Break-Even” Cash Flow?

What is break-even (or neutral) cash flow?  Mostly a lie.  Well, not really a lie so much as a fantasy.  Or a projection. 

Lately I’ve been speaking with a lot of newer investors (1 rental property or fewer) and the term “break-even” cash flow keeps coming up.  Listen, when we do these projections they are just that, projections.  We try to be very accurate on income and expenses.  And when I whittle all that down to Cash Flow Before Taxes and it says $895 for the year, to me that’s break-even cash flow.

For those of you who are not regular readers of BBQ Capital you need to know what I mean by Cash Flow Before Taxes.  Click on the 4 Benefits of Real Estate Investingunder the Categories column.  That’ll be easier than me explaining it all.  But rest assured, I cover as many conceivable expenses as possible.  This isn’t pie-in-the-sky. 

It’s here.  In writing.  To me “break-even” cash flow is anywhere from losing a thousand to making a thousand.  If losing a thousand is major to you then you need to be sure of your reserves that are almost mandatory or invest in the stock market where there is never a chance you could lose a thousand dollars.    😉