A positive cash flow means that each month an investment property makes a profit after expenses. Most real-estate investors look to invest in properties with a positive cash flow. However, such properties are not easy to find in the most expensive neighborhoods.
You should not look at cash flow only. The leveraging used for buying the apartment also makes a difference. The more self-financing you have available, the easier it is to make your cash flow positive as your instalments do not eat away at your profits.
Properties with a negative cash flow may also be profitable if the negative flow is the result of paying off your debt. However, it is not recommended to buy apartments with a negative cash flow in areas where property values are decreasing. In such areas, your investment may never become profitable.
As you calculate your rental profit, keep your investment strategy in mind and make a long-term calculation that takes possible ‘empty’ months and renovation expenses into account.