Cash flow vs appreciation

[Matt VanGorder]

Which is better? A fourplex for $350k or 3 duplexes for $110-$120k each? The fourplex is in a better location and would appreciate much more than the duplexes. The duplexes give me more doors and more cash flow. I currently have 2 duplexes.

[Chris Seveney]

@Matt VanGorder

This is where understanding finance comes into use. You run an IRR calculation on both for a 5 year hold period and see which one provides a better return.

There will be a clear winner and 9 out of 10 times it’s the appreciating asset because if a $350k property appreciated 3% per year thst is $10k/ year which is over $800/mo whereas cashflow properties will not generate that after expenses.