What’s more important CF or ROi ?

Question

What’s more important CASHFLOW or ROi ?

Scott Mac · Answer

Hi Isiah,

It depends on what YOU want.

Good Luck!

Anthony Vicino · Answer

@Bill Brandt While I love the essence of the quote "nobody cares their 401k doesn't cashflow", it's not entirely true. Lots of people care; that's why they seek out cash-flowing real estate assets. ;)

@Isiah Ferguson Like others have already pointed out, it depends. ROI is ultimately the most important factor, but only if you can survive long enough to realize it. That's where cash flow comes in handy.

Problem is, cashflow can always be bought (it's just a function of how much you ultimately put in), so it isn't, in and of itself, a terribly meaningful metric.

Nick Barlow · Answer

@Isiah Ferguson it’s like @Scott Mac said, depends on your goals.

If it’s appreciation, look at your ROI. If you want Cashflow, focus on that.

Are you looking for FI today or long term wealth?

@Bill Brandt, love your quote “nobody cares their 401k doesn’t Cashflow”

Isiah Ferguson · Answer

Cashflow as after all expenses are paid. As far as ROi meaning 0 to minimum money into an deal, which can be high ROi but very low monthly cashflow after property expenses are paid. I thought the goal was to extremely increase your passive income regardless of ROi ?

Bill B. · Answer

is this a bad deal?

$200k property

$25k / year rent

$5k per year expenses.

10 years zero percent interest, no money down mortgage so zero cashflow for 10 years.(assuming a 10 year lease with no increases.)

If you don’t need the cashflow, and in my opinion you shouldn’t. (Otherwise what happens when the tenant stops paying and you have to evict, or you need a pair of $5k ac units.) Your true income is all that matters.

Nobody worries that their 401k doesn’t cashflow.

David Barnett · Answer

As a follow up to Scott's it depends comment (he's 100% right), what does your financial position look like?  Are you able to withstand capex or negligible cash flow for an appreciation play?  Pure appreciation plays are more risky.

What’s more important CF or ROi ?

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