{"id":124593,"date":"2026-05-07T15:42:33","date_gmt":"2026-05-07T15:42:33","guid":{"rendered":"https:\/\/christiancorner.us\/index.php\/2026\/05\/07\/the-8-biggest-mistakes-new-cash-flow-investors-make-and-how-to-avoid-losses\/"},"modified":"2026-05-07T15:44:27","modified_gmt":"2026-05-07T15:44:27","slug":"the-8-biggest-mistakes-new-cash-flow-investors-make-and-how-to-avoid-losses","status":"publish","type":"post","link":"https:\/\/christiancorner.us\/index.php\/2026\/05\/07\/the-8-biggest-mistakes-new-cash-flow-investors-make-and-how-to-avoid-losses\/","title":{"rendered":"The 8 Biggest Mistakes New Cash Flow Investors Make (And How to Avoid Losses)"},"content":{"rendered":"<p>\n<\/p>\n<div id=\"post-content\" :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n                            <!-- Table of contents: mobile --><\/p>\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n                    <button x-on:click=\"open = !open\" class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n                        <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<p class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">in this article<\/p>\n<p>                    <\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">whether you invest <\/span><span data-preserver-spaces=\"true\">actively or passively<\/span><span data-preserver-spaces=\"true\">The same broader risks apply <\/span><span data-preserver-spaces=\"true\">cash flow<\/span><span data-preserver-spaces=\"true\">. Beware of these mistakes that could leave you with no cash flow at all \u2013 or worse, your deal sinking completely. <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">1. Failing to plan for wealth management<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Excellent asset managers can keep struggling deals afloat. Weak or mediocre asset managers can make perfectly good deals. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">I&#8217;ve learned this the hard way many times. In my 20s, I bought a lot of rental properties in low-income neighborhoods in Baltimore. I didn&#8217;t realize until years later that good property managers don&#8217;t take properties in bad neighborhoods. They earn their money as a percentage of the rent they collect, and rundown properties come with high-maintenance tenants for low wages. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This tainted property managers <\/span><span data-preserver-spaces=\"true\">who were<\/span><span data-preserver-spaces=\"true\">    Willing to take me as a customer.<\/span> <span data-preserver-spaces=\"true\">every one <\/span><span data-preserver-spaces=\"true\">did a bad thing<\/span><span data-preserver-spaces=\"true\">And I eventually sold many of those properties at a loss.<\/span><span data-preserver-spaces=\"true\"> <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">But <\/span><span data-preserver-spaces=\"true\">passive side<\/span><span data-preserver-spaces=\"true\">I&#8217;ve seen it play out both ways, too. I once saw a mobile home park deal that looked great on paper, but they could never find a good property manager. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The co-investment club through which I invest every month reviewed a deal about 18 months ago that involved more than 400 units spread across a dozen cities in three states. The numbers on paper were also unbelievable, but by that time I had learned to check the asset management plan. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Our club frequently quizzed the operator about its plans, and we liked its response: &#8220;We think this deal will sink or swim based on property management. Managing these dispersed units will be a challenge, so we&#8217;re making all efforts to stick to the different property managers like glue.&#8221; <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And sure enough, that deal has outperformed its initial estimates and is currently paying off. <\/span><span data-preserver-spaces=\"true\">more than one<\/span><span data-preserver-spaces=\"true\">    9% <\/span><span data-preserver-spaces=\"true\">produce<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> <\/span><\/p>\n<div class=\"justify-center \" x-data=\"{ IabAdad_block_: popAd(('r720x90'), '1') }\" :class=\"IabAdad_block_.linkURL ? 'flex pt-8' : 'hidden'\">\n<div class=\" hidden sm:block\"><\/div>\n<div class=\"block sm:hidden\">\n          <img class=\"m-0\" :src=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.r320x50\" :alt=\"IabAdad_block_.r320x50Alt\" loading=\"lazy\" fetchpriority=\"low\"\/>\n        <\/div>\n<\/p><\/div>\n<h2><span data-preserver-spaces=\"true\">2. Accepting risky loan terms<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Real estate investments go bust for one of two reasons: the operator runs out of cash or runs out of time. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Debt affects both risks. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Many real estate investors faced trouble with variable-interest loans in 2022 when interest rates skyrocketed. <\/span><span data-preserver-spaces=\"true\">Within a few months, many people left <\/span><span data-preserver-spaces=\"true\">Happen<\/span><span data-preserver-spaces=\"true\">    healthy cash flow <\/span><span data-preserver-spaces=\"true\">losing money every month<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\">    And from there, it&#8217;s a matter of time before you either sell at a loss or default on your loan. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Similarly, if you take out a balloon loan, you are forced to either sell, refinance, or recapitalize when it is due in a few years. Then, over the years the debt of many commercial operators has expired <\/span><span data-preserver-spaces=\"true\">forced to<\/span><span data-preserver-spaces=\"true\">    Selling or refinancing in a bad market. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Read: loss. <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">3. Underestimating renewal risk<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Managing contractors is extremely difficult. They constantly blow deadlines and budgets, demand more money midway through projects, cut corners, and otherwise don&#8217;t perform as promised. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Before investing in any real estate deal, I ask, &#8220;Who will do the renovations, repairs, and maintenance?&#8221; Household staff? Teams of contractors and subcontractors? <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Equally important: How many projects have you worked on with this team before? <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Inexperienced operators are taken for granted <\/span><span data-preserver-spaces=\"true\">contractors<\/span><span data-preserver-spaces=\"true\">. Consider yourself cautious. <\/span><\/p>\n<aside class=\"my-10 xl:my-4\">\n<p class=\"font-bold mt-0 mb-4 text-xl text-slate capitalize\">You might also like<\/p>\n<\/aside>\n<h2><span data-preserver-spaces=\"true\">4. Underestimating running expenses<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Many investors underestimate future expenses \u2013 and end up earning less cash flow than expected. <\/span><span data-preserver-spaces=\"true\">because of it<\/span><span data-preserver-spaces=\"true\">. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">property taxes increased substantially <\/span><a rel=\"noopener\" target=\"_blank\" class=\"editor-rtfLink\" href=\"https:\/\/finance.yahoo.com\/personal-finance\/taxes\/article\/property-taxes-increased-by-nearly-25-in-recent-years-here-are-the-states-feeling-it-the-most-150000099.html\"><span data-preserver-spaces=\"true\">25% between 2019 and 2024<\/span><\/a><span data-preserver-spaces=\"true\">. Insurance premium increased <\/span><a rel=\"noopener\" target=\"_blank\" class=\"editor-rtfLink\" href=\"https:\/\/insurify.com\/homeowners-insurance\/report\/home-insurance-price-projections\/\"><span data-preserver-spaces=\"true\">12% in 2025 alone<\/span><\/a><span data-preserver-spaces=\"true\">    And 46% by 2021. <\/span><span data-preserver-spaces=\"true\">labor cost <\/span><span data-preserver-spaces=\"true\">has increased<\/span><span data-preserver-spaces=\"true\">    For maintenance and repair.<\/span><span data-preserver-spaces=\"true\"> <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And beware of rose-colored lenses as you (or the operator) forecast vacancy rates, property management costs, rent default rates, and evictions. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">When we examine a deal together in our co-investment club, we try to find out how conservative the operator&#8217;s forecasts really are. We would like to see them use &#8220;unreasonably&#8221; high future expense forecasts, knowing that every real estate investment is subject to ups and downs. <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">5. Overestimating fare increases<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">On the other hand, we would like to see operators forecast lower fare increases in the future to keep projections conservative. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">For example, we recently invested in an operator with an expected 0% fare increase for the first two years of the deal. We think they&#8217;ll definitely do better than this\u2014but we appreciated the conservative underwriting. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">of the district <\/span><a rel=\"noopener\" target=\"_blank\" class=\"editor-rtfLink\" href=\"https:\/\/www.zillow.com\/rental-manager\/market-trends\/united-states\/\"><span data-preserver-spaces=\"true\">rental manager<\/span><\/a><span data-preserver-spaces=\"true\">    Shows nationwide fares <\/span><em><span data-preserver-spaces=\"true\">leaving<\/span> <\/em><span data-preserver-spaces=\"true\">5% compared to last year.<\/span><span data-preserver-spaces=\"true\">    So no, fares are not an elevator that only goes up. <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">6. Underestimating future competition<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">fares <\/span><span data-preserver-spaces=\"true\">are below<\/span><span data-preserver-spaces=\"true\">    in phoenix <\/span><span data-preserver-spaces=\"true\">By<\/span><span data-preserver-spaces=\"true\">    8% compared to last year.<\/span><span data-preserver-spaces=\"true\">    Why? Largely because so many new multifamily properties have come online in the last two years. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And this figure actually hides the real carnage, as apartment operators have had to make huge concessions to attract new tenants. <\/span><span data-preserver-spaces=\"true\">Market <\/span><span data-preserver-spaces=\"true\">get<\/span><span data-preserver-spaces=\"true\">    Filled with new supplies, <\/span><span data-preserver-spaces=\"true\">and sent it<\/span><span data-preserver-spaces=\"true\">    net operating <\/span><span data-preserver-spaces=\"true\">Income<\/span><span data-preserver-spaces=\"true\">    (<\/span><span data-preserver-spaces=\"true\">NOIs<\/span><span data-preserver-spaces=\"true\">) Falter.<\/span><span data-preserver-spaces=\"true\">    Many properties have become cash flow negative and are in serious distress. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This is great for buyers and investors like me who love to see fire-sale bargains. This is not great for people who have invested in those assets. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">your share <\/span><span data-preserver-spaces=\"true\">Due diligence<\/span><span data-preserver-spaces=\"true\">    This includes researching new supply creations in the submarket. Skip it at your own risk. <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">7. Ignoring legal risk<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">When I was an active investor, I was sued several times as a landlord. This is completely useless. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">People love to sue landlords. Tenants, contractors, neighbors \u2013 they all see an opportunity to make a quick buck. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Then there is lender risk. When you borrow money as an investor, you almost always have to sign a personal guarantee. If you default, the lender doesn&#8217;t just seize their assets \u2013 they seize your personal assets, too. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Today, I only invest passively. <\/span><span data-preserver-spaces=\"true\">i am safe<\/span><span data-preserver-spaces=\"true\">    From both of those types of liability risks. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Don&#8217;t get me wrong:<\/span><span data-preserver-spaces=\"true\">    Someone could still sue the operator, and that could impact my returns as an investor. But they can&#8217;t sue me personally. I don&#8217;t have to worry about paying out of pocket for a lawyer or attending court. <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">8. Ignoring opportunities to boost cash flow<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Operators often raise rents with &#8220;value-added&#8221; strategies such as refurbishing units and improving common areas, amenities, and signage. This is great; Nothing against traditional value-added strategies. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">But some investors go beyond the obvious to boost NOI <\/span><span data-preserver-spaces=\"true\">Even more<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\">  <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In a recent deal my co-investment club investigated and invested in, the operator converted unused storage space into a <\/span><span data-preserver-spaces=\"true\">Excessive<\/span><span data-preserver-spaces=\"true\">    studio apartment <\/span><span data-preserver-spaces=\"true\">Unit<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Some operators add covered parking spaces and charge extra for them. Others begin billing tenants for utilities. Still others add co-working spaces to the site and charge usage or membership fees. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">One of the smartest strategies for boosting cash flow I&#8217;ve ever seen is called &#8220;&#8221;.<\/span><span data-preserver-spaces=\"true\">Section 8 overhang<\/span><span data-preserver-spaces=\"true\">&#8221; <\/span><span data-preserver-spaces=\"true\">This includes purchasing Low Income Housing Tax Credit (LIHTC) property<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">affordable price<\/span><span data-preserver-spaces=\"true\">    Based on its current NOI.<\/span> <span data-preserver-spaces=\"true\">Then the operator slowly turns all <\/span><span data-preserver-spaces=\"true\"><\/span><span data-preserver-spaces=\"true\">    Cash tenants with Section 8 tenants, collecting full-market rent \u2013 \u200b\u200ball the time <\/span><span data-preserver-spaces=\"true\">keeping<\/span><span data-preserver-spaces=\"true\">    LIHTC tax benefits, because <\/span><span data-preserver-spaces=\"true\">rules for<\/span><span data-preserver-spaces=\"true\">    LIHTC <\/span><span data-preserver-spaces=\"true\">what to ban <\/span><em><span data-preserver-spaces=\"true\">Tenant<\/span> <\/em><span data-preserver-spaces=\"true\">Can pay, what not <\/span><span data-preserver-spaces=\"true\">landlord<\/span><span data-preserver-spaces=\"true\">    Can collect.<\/span><span data-preserver-spaces=\"true\"> <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">See the flaw? <\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">lifetime income<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">i like true passive income <\/span><span data-preserver-spaces=\"true\">Now!<\/span><span data-preserver-spaces=\"true\">    Hits my bank account without me having to lift a single finger.<\/span><span data-preserver-spaces=\"true\">    And since I started investing passively through a co-investment club, every year I have collected more and more real passive income. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Some deals pay low yields in the 4%-6% range, with most <\/span><span data-preserver-spaces=\"true\"><\/span><span data-preserver-spaces=\"true\">    Estimated returns from <\/span><span data-preserver-spaces=\"true\">profit on<\/span><span data-preserver-spaces=\"true\">    sale.<\/span> <span data-preserver-spaces=\"true\">other deals pay <\/span><span data-preserver-spaces=\"true\">high yield <\/span><span data-preserver-spaces=\"true\">In<\/span><span data-preserver-spaces=\"true\">    8%-16% <\/span><span data-preserver-spaces=\"true\">Category<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This type of passive cash flow gives me more options in my life and career. I spent several years living abroad, investing and earning cash flow the entire time. But when my family and I moved back to the US, I knew our cost of living would go up \u2013 and that was okay, because my earned income gets complemented by my passive income. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If I ever want to sell my business and <\/span><span data-preserver-spaces=\"true\">Go<\/span><span data-preserver-spaces=\"true\">    Write a novel, guess what? My passive income from cash flow investing will help support me. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Cash flow investing can give you freedom. Or if you do it wrong it can give you headaches, nightmares and harm. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">When in doubt, join an investment club to check deals and cash flows with other investors. I personally invest like this with small amounts every month <\/span><span data-preserver-spaces=\"true\">dollar-cost averaging<\/span><span data-preserver-spaces=\"true\">. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">I will never go back to investing in any other way. <\/span><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>in this article whether you invest actively or passivelyThe same broader risks apply cash flow. Beware of these mistakes that could leave you with no cash flow at all \u2013 or worse, your deal sinking completely. 1. Failing to plan for wealth management Excellent asset managers can keep struggling deals afloat. Weak or mediocre asset<\/p>\n","protected":false},"author":1,"featured_media":124595,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[60],"tags":[2481,1722,1684,3201,1219,1861,15965],"class_list":{"0":"post-124593","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-meditation","8":"tag-avoid","9":"tag-biggest","10":"tag-cash","11":"tag-flow","12":"tag-investors","13":"tag-losses","14":"tag-mistakes"},"_links":{"self":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/124593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/comments?post=124593"}],"version-history":[{"count":1,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/124593\/revisions"}],"predecessor-version":[{"id":124596,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/124593\/revisions\/124596"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/media\/124595"}],"wp:attachment":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/media?parent=124593"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/categories?post=124593"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/tags?post=124593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}