Why Your Numbers Show Zero Cash Flow—and the Unconventional Moves That Could Turn It All Around Today

Ashley:
Today’s rookie reply is about knowing your constraints before you buy. Sometimes a deal looks bad because your assumptions are wrong. Other times your assumptions are right and the deal really does not work.

Tony:
We also have a TN visa holder who wants to invest without crossing legal lines and a rookie with limited capital, wondering when to bring in a lawyer, a CPA, and a property manager.

Ashley:
This is the Real Estate Rookie Podcast. I’m Ashley Kare.

Tony:
And I’m Tony J. Robinson. And with that, let’s get into today’s first question. And so this question comes from Lee in the BiggerPockets Forums, and Lee says, “I’m looking at buying long-term buy and hold rentals in Northwestern Montana, and I’m fortunate enough to be about an hour’s drive from a college town in a tourist-driven market, one to my south, one to my north. Over the last couple of months, I’ve run BiggerPockets calculator analyses on three or four dozen small multifamily properties at list price, and then rerun them with progressively more aggressive offers, 5% off, 10% off, sometimes 20% below asking price, and almost none of them cash flow on day one. I want to make sure I’m not the problem before I conclude the market is the problem. Here’s one representative deal so you can see exactly what I’m working with. The property is an $860,000 duplex.
It rents for $4,700 a month with existing tenants, 25% down, 7.1 interest rate on a 30-year conventional note. Insurance is about 300 bucks per month. Taxes at 360, vacancy assuming 8%, maintenance at 10%, CapEx at 10%, and then there’s no HOA. At list price, the monthly cash flow is a negative $1,115, which is obviously not what we want. If I get the seller to take 10% off, cashflow goes to negative $687. If I want to get into the disrespectful offer or Hail Mary at a 635 offer, then I get to a cash flow basically breaking even, so negative 18 bucks per month. That’s the only scenario in my whole pipeline where the deal cash flows on day one and it requires the seller to cut $225,000 off their asking price. Every other property I’ve modeled tells the same story. Rents in this market are roughly 3,000 to 5,000 on multifamily properties priced between 650 and 900.
The 1% rule is a fantasy here. Most properties land between 0.5 to 0.8. So are my assumptions off? The eight, 10 and 10 for vacancy maintenance and CapEx feels standard, but my realtor tells me many investors run leaner. Am I being too conservative? Are my expectations off? Is day one positive cash flow at 25% down just not a realistic ask in 2026? Am I looking at the wrong deals? Should I be hunting for midterm rental, short term rental, house hack, conversions, things like that? Is the market just wrong for me right now? So these are all good questions, right? So I think for Lee, you hit the nail on the head. I think my initial reaction is that this isn’t necessarily a real estate investing doesn’t work problem. This is you might just live in a higher cost of living area. You’re saying the duplexes are going for eight, almost $900,000.
You got to command some pretty high rents in order for that to work. So if I’m you, there’s probably one or two things I’m doing. Either A, I’m moving to a different market because again, 20,000 cities in the United States, there are definitely markets across the country where we can get cashflow positive on day one. So can we move to a different market where it’s just simply easier to do that? Or to your other point, can we pivot our strategy in this existing market to then make the deal actually work in a way that produces cash flow? So instead of traditional long-term buy and hold rentals, to your point, can you do maybe renting by the room? Can you do a furnished midterm rental instead? Is there another strategy that you can layer on while staying in that market? But I think where rookie investors sometimes get themselves stuck or kind of fall into this feeling of like, man, real estate investing doesn’t work, it’s when they try and pair their goals with the wrong market.
The market simply doesn’t support what their goals are. You got to establish your goals and then identify if the market actually supports it. So that’s what comes to mind first for me, Ash, is either pick a new market or pick a new strategy within the existing market. What about you?

Ashley:
Yeah, I think your idea, and I didn’t even think of this as you were reading the question, but maybe changing the strategy of the property. I’ll give you an example. I had a property that I listed as a long-term rental for $1,000 per month, and we really didn’t get that much interest on it. So this was about two years ago and I decided to pivot that property to a short-term rental. So to rent that property, I listed it at a thousand, but it wasn’t really renting. We had some interest, but nobody acted on it and then we took it down and we pivoted to a short-term rental. And so really the market rent was probably less than a thousand since it wasn’t getting rented right away. But now last month, I just looked it up, we did $3,200 in revenue for that property as a short-term rental.
That is a huge difference from a thousand dollars. And now that property covers way more than the mortgage payment on the property. So I think that is the first thing I would look into is if there’s different ways to change the strategy on this property, rent by the room, midterm rental, short-term rental, all of these different things. That’s the first thing I would do is getting creative. And then the next thing I would do is look at your variable expenses. So I see for the maintenance, you put 10% of reserves that you are saving, and maybe that is a little too conservative. I’d be interested to know what is the age of this home? If this is an older home that hasn’t had the electric, the plumbing or anything updated in a long time, then you are spot on with the 10%. But if it is a property that is newer, was built pretty recently or was completely gutted and remodeled, then you probably don’t need 10% and you can bring that down a little bit.
So there are a little bit of ways you can manipulate those variable expenses, but you still want to be conservative. I would never ever go less than 5%, unless maybe you’re getting a home warranty on a brand new build and the home warranty is for the next three years and maybe I would knock it down to 3%. But I think that you do have a little room and maybe the maintenance to bring that down to less than 10%. Then also for the vacancy, you have 8%, which is pretty middle of the road. I like to go from five to 10%. So looking at your market, what is the vacancy rate? Is there a ton available and things aren’t renting? Are things renting good? But I would probably stay with 8%. Now your CapEx, your capital expenders that you have that as 10% of rent. Again, look at this home.
Was there a new roof put on last year? Was the HVAC installed two years ago? Is the hot water tank brand new? How many capital expenditures do you expect over the next five to 10 years that you’ll need to have this money for? So maybe those are things that you could look at that you are being a little bit more conservative, but I would also rather, especially your very first deal, for you to be more conservative than to end up realizing you didn’t account for as much as what ended up happening. Coming up, can you own US rentals while working here on a TN visa? We will separate passive ownership from active work and talk about the professional advice you need before buying. We’ll be right back.
Okay. So these numbers show why a clear investment constraint can save you from a bad deal. Our next rookie has a different constraint. He wants to buy long-term rentals in Austin while making sure the investment does not conflict with his TN status. So his question is, “Hey everyone, I’m currently living and working in Austin, Texas on a TN visa and looking to start analyzing and purchasing long-term rental properties throughout the Austin metro area. I’m curious if anyone here has personally owned long-term rentals in the US while simultaneously maintaining TN status. How has the experience been? Particularly when it comes to financing property management and making sure you stay within the rules of your TN status. If you’ve done this yourself or know someone who has, I’d love to hear about your experience and any advice you have. Thanks.” So I think my first initial reaction is going to go to Claude and I am going to put in my information and what I’m trying to do, what my TN status is, what I want to do with real estate, where I’m currently living, as much as information as I can and I’m going to put it into Claude and I’m going to see what kind of feedback I get.
The second thing is going to be talking to an immigration attorney who actually has worked with someone and real estate ownership. So if it is possible, they understand the process of how to do that. So I’m going to ask them, first of all, is it possible? Second of all, what is the process of buying real estate? And then third, how many people have they actually taken from start to finish where they’ve had the visa and they’ve helped them close on their first rental property or real estate property in the US? That would be my process. First, go to AI, get generic general information first, and then I’m going to actually go and do a call with an immigration attorney. A lot of the attorneys either do a free consult or you pay a couple hundred bucks to do a consult with them. And usually when I’ve done this before for different random things, you actually get quite a bit of information just during that consult and then you can decide whether to move forward or not.
But that couple hundred bucks you may have to pay for the consult, well worth it to get the correct and accurate information.

Tony:
Yeah, I love that. Going to an attorney for sure. And obviously guys like Ash and I, neither one of us are visa holders, so we’re just saying what we’d do if we were in that situation. In addition to talking to an attorney, I’d maybe try and also find someone with the same visa status who has successfully purchased a rental property. If there’s anyone else that you work with who’s on a similar visa status and just get their experience. Okay, what did you learn as you went through this process? What are some of the gotchas that you didn’t think about before, but that are very clear to you now that you should have thought about beforehand? But I think getting someone else’s firsthand experience would be incredibly useful. And then the final thing I do is I’d probably also go talk to some lenders to try and understand what loan products are available to me.
Again, I’m not sure about the TN visa specifically, but maybe there could be some sort of restrictions on the type of products that a lender can actually give you. So I’d want clarity on that. Am I paying a premium on interest rate? Am I maybe limited on the amount of down payment that I can put down or getting that number lower per se? So I go talk to a few lenders and explain your visa situation, your visa status, and let them point you in the right direction on, “Hey, here are some options that you might want to consider.” So I think if you tackle all of those, you’re getting firsthand experience from other folks who’ve done this before, you’re talking to an attorney, you’re talking to a lender, those are probably the core team of people you’ll need to have clarity on what the right next steps are for your specific situation.
And the last piece, let’s talk about it from the management side. Let’s say that you do have to maybe leave the country, you’re going back home wherever it may be.
How do you do that remotely? And guys, I chuckle because for me, it’s like whether my property is 90 minutes away is my closest property or halfway across the country is my furthest property, our processes and systems for managing them are basically the same. There isn’t anything special that I do for the 3000 mile away property that I don’t also do for the property that’s 90 minutes away. I still have a really, really solid team. I still have all of my tools and software in place. I’m still managing it the same way. It doesn’t matter how close it is. So I don’t necessarily think that from a management perspective, even if you have to travel to a different country, different continent even, that you won’t be able to effectively manage your property wherever you are. It’s just all the foundational things. Good team, good systems, good processes, good tools, good software, and you can take it anywhere.
After the break, a rookie with limited capital is wondering how to assemble a lawyer, a CPA, a lender, and a property manager before buying anything. And we’ll explain what build your team really means at this stage.
All right guys, our final question is about a phrase that rookies hear all the time, build your team. Aurelio wants to know how that works when capital is limited and there is not a deal under contract yet. So here’s Aurelio’s question, “How do I go about getting a lawyer, property manager, CPA, et cetera, if my capital is limited? How does that actually work?” And Aurelio is reading through one of the BiggerPockets of books on getting your ducks in a row. So here’s my take guys on building your team. I think there are certain people that you need to engage at different parts of the process or depending on what your situation and what your challenges and what your goals are. I’ll give you an example from the short-term rental industry because a lot of folks kind of face the same thing where it’s actually their CPA that recommends they buy a short-term rental and it’s because they need to do that as a tax mitigation strategy.
So it’s your CPA who’s initially saying, “Hey, you should think about buying an Airbnb,” so that they become the first person on your team. Let’s say that isn’t the case. Maybe you’re not buying for that reason and your initial goal is, “Hey, I want to build some additional cash flow streams.” Well, then maybe the first person you need is an agent who can take you around town and give you all the ins and outs and help educate you on the best parts of town to buy and where to avoid. If you are really, really focused on flipping houses, well, maybe you need to go find a general contractor in your market first to understand, “Hey, what’s it actually going to cost for me to repair these types of properties?” So I think depending on what your goals are, depending on what your strategy is, that sometimes can dictate who the first person is on your team that you need to go build.
But I will oftentimes caution against… I get some rookie investors who are like, “Tony, I just spent $30,000 setting up this really elaborate entity structure for all of my rentals and I’ve got this trust that owns this trust and there’s this thing in Wyoming and I’ve got this thing over here, this offshore thing.” And it’s like, “Okay, well, how many properties do you own?” “Oh, nothing yet. I haven’t bought anything yet, but the structure’s there. And I feel like that’s kind of putting the cart before the horse. So for me, bringing in the expensive attorneys, bringing the expensive CPAs, I think I try and pull those levers as needed when it’s right in the sequence, like when you have a deal and not necessarily something you need to do on day one.

Ashley:
If you’re in a state like mine, like New York State, to actually close on a property, you need an attorney. So when you are going through the process of offering and then you go under contract, one of the immediate questions or answers that you have to put onto the contract is who is your attorney that’s representing you? So in a state like mine, it does make sense to have a lawyer in advance. So if you’ve literally used a lawyer for anything, my first initial reaction would be to call them and ask if they do real estate transactions. If not, if they can refer you to someone that does. And then it would just be a simple phone call, a simple email is to, “Hi, I was referred by so-and-so. I am planning on purchasing a property and I need an attorney to actually do the real estate transaction.
Can you let me know what your fees are and what the process is?” Or something like that. My real estate attorney charge or my attorney charges pretty much a flat rate every time for their work and then add in all the expenses that incur, like survey, things like that, depending. But I would at least have an attorney lined up to actually do the transaction for you. As far as a CPA, I would have somebody that’s maybe not at Walmart and has a little desk that’s at the checkout aisle where you can go in and get your taxes done. I would definitely have somebody who can advise you on your taxes and the tax advantages of real estate when you do purchase your property. So if you’re purchasing your property towards the end of the year, I would make sure you have that CPA, that accountant in place before the end of the year because you’re purchasing that property in that year and you want to make sure that you’re taking advantage of everything before the year end and doing everything correctly, even more importantly as far as reporting, especially if you have no idea about taxes at all or in general, having a CPA lined up that can help you with that.
And a lot of these things, you’re not charged until you actually use them. So just planning ahead because a lot of CPAs, like the CPA that Tony and I use for tax planning, Tony also uses her for his tax returns. I tried to get in last year and she’s like, “No, sorry, you’re too late. We’re full. You have to keep working with who you’re working with.” So if you want a really good person, sometimes it’s not as easy as just calling like, “Hey, can you help me right now? There is some time and some process to actually get into working with the companies too.” And then a property manager, if you intend to use a property manager, I would start looking now and start interviewing them, calling, finding out what their fees are, what their processes are for a maintenance request. You want to make sure the property manager is not only just great to you as the owner, but will also be great to your tenants and it’s just going to create a better relationship and relieve a lot of headaches for you yourself.
But I would do phone calls. I would at least have a little Rolodex of people that when you are ready to get that first deal, you already know who is going to be your first call to get lined up instead of having to… When you’re acquiring your first deal, there’s a ton of work you have to do on your own, get through the inspection, do the due diligence, get your financing set up. The last thing you want to be doing is conducting interviews with property managers to see who can hire. So as much as you can, do these phone calls and interviews ahead of time. Well, thank you guys so much for joining us today. And remember, if the numbers do not work, do not force them. Define legal boundaries and build relationships before buying services. Your first deal should fit your real financial, legal, and operational life.
The best plan is the one you can explain, afford, and execute without depending on a future rescue. I’m Ashley, he’s Tony, and we’ll see you guys in the next episode.