现金流的错算和误用

本坛最流行的词是什么？是现金流。本坛地主，无论大小，言必称现金流。没错，任何business，现金流非常重要，好像血液。出了问题，就得关门打烊了，但是在本坛，被奉若神明的现金流确实是错误的。不仅错的很离谱，而且从头错起！

由于本人时间少，任务重，工作忙，且重病缠身，更重要的是写的帖子，看的人寥寥无几，但是看到大家对错误的东西盲目崇拜，很为大家的钱袋担心，所以匆匆写下此帖，对常见错误略举二，三。对不同意见者，欢迎炸砖。

第一个很奇怪的错误是下面这个很奇怪的论点：“you can turn this into a good investment by putting down more down payment”；“要想实现正的现金流，必须增加首付”。。。 以上论点均取自本坛名家名帖。奇怪在于这个很大的头期首付竟然就被忽略了，不被算进现金流了。这么说所有cash买的房产无论贵贱，都是好的投资，因为都是“正”的现金流。

数学错误的理论，听上去再好，就像有致死剧毒的食物，再好吃也不能吃。真正的正的现金流应该是不仅无需首付，而且需要贷款大于100%，把所有的closing cost都cover住，才行。而且以后每个时刻的收入总是大于支出，这样的才算正现金流。

第一个错误是算错，第二个错误则是误用。对每一个房产单独算现金流是荒唐的，无意义的。就像不能对公司的每一笔花费算现金流。员工培训的现金流是多少？如果是负的，就不干了吗？现金流只有对一个独立核算单位有意义。比如你个人。买了十个房产，总体的现金流才有意义，你才能考其他房产的盈利投资下一个房产，一大笔钱投出去，还不是把正现金流扭成负现金流吗？

第三，就是现金流和盈利与否是两回事，和是不是好的投资更是三回事。这点我已经说了很多遍，正的现金流不一定是好的投资，而负的现金流不一定是坏的投资。详细看我今天下午的帖子：

The question you asked was not good. There was not enough information to calculate. On the other hand, you gave some information which is not directed related.

The answers from those master level landlords were based on their experiences, but I have to say they were not satisfactory to me. Unlike religion and culture which can accept multiple answers, there is always just one scientific answer. Here is my answer:

First, you got to understand which relative parameters which affect the calculation directly. All those parameters must be quantitative. Then you have to provide all those or as many as possible. You should have provided property tax amount, school tax amount, insurance…

Some other parameters are not directly relevant, but you provided. I saw a lot of others did the same, always providing the square footage of the property, number of bedroom, bathroom, the quality of the school district, location,… all those are not needed for calculation, first they cannot be quantified. Second, they are not direct related, for example, the square footage or number of bedroom, bathroom, the quality of the school district, location,…, they are reflected through the monthly rent! Or more other parameters, such as the location could affect your mortgage rate, alternative investment rate or cost of maintenance.

Misusing cash flow is one of the big pitfalls in those experienced landlords thinking. Any problem of cash flow is not a problem of profitability; instead, it is a problem of operation. A lot of real experienced landlords have suffered a lot from bad cash flow which could suffocate or had suffocated their rental business, but that’s the problem of their management and operation. They always confuse the profitability of the business with the survival of the business. That’s the reason Miat42 concluded that it’s a bad investment if you down paid 20%, but a good one if you down paid 30%. He never calculate the money has been paid which means according to his dictionary, good investment = survival; while bad = bankruptcy. That\'s fine, but you should be aware according to this, you will lose $7,591 after your 1 year positive cash flow rental operation. This $7,591 is well calculated.

You have to define “good investment” first maybe, but I were you, I would define it as generating better returns than other alternative investment. Of course it has to be profitable, (which is different from positive cash flow) simply because if we put $1,000 cash under our bed, it is still $1,000.

Since you did not provide enough information, I have to assume all of the other parameters, such as property tax, and many others listed in my previous email. And also assume that the home price appreciation rate is 1%, the rent increase 1%, inflation rate 2%, other alternative investments 5%.... I got the following conclusion:

If you buy the house and rent it for more than 5 years, then it\'s a good investment because it generates better returns than 5%.

If you buy the house, turn it into a rental business, then sold out in 5 years, it’s a bad investment because the appreciation and rental income cannot cover the costs of buying and selling.

My conclusions are calculated thoroughly, not just uttered out through my mouth with some kind of believing. Of course, everybody knows cash flow could kill you, but it will not guarantee good investment.

Whether you earn money or lose money, it has nothing to do with location, unless the location could affect the home appreciation rate and alternative investment return rate, but all of those have been taken into account already. $1 earned in California is the same $1 earned in New York. Separating all those mentioned above: cash flow, percentage of payment, location ... from profitability are the key difference from my calculation with others in this thread.