Are We Chasing Cash Flow or Building Wealth?? A Long-Term vs. Short-Term Dilemma

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Are We Chasing Cash Flow or Building Wealth?? A Long-Term vs. Short-Term Dilemma

Kyle Gagnon
Member since 2025 · 9 posts · 4 votes

I’ve been thinking a lot lately about the balance between immediate cash flow and long-term wealth building in real estate.

So many of us jump into real estate chasing monthly passive income (which is great!), but I’ve noticed a pattern—sometimes we pass on deals with incredible appreciation potential, tax benefits, or value-add upside simply because they don’t meet our $200/month cash flow threshold.

Here’s the dilemma:

✅ Cash flow pays the bills today—but often comes with higher-risk areas, more tenant turnover, and slower appreciation.

💼 Equity growth/appreciation-focused deals may bleed cash early on but can 10x your net worth over time if managed well.

My question to the community:

  • Do you prioritize one over the other in your current portfolio?

  • How has your strategy changed as you've grown?

  • If you had to start over, would you choose differently?

Would love to hear from both new and seasoned investors here.

Let’s dig into this—what's your North Star?

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
1y

Both.  They are intertwined.  Long term wealth is usually misinterpreted as being the same property long term.  It shouldn't be.  Cash flow is applied wrong.  It's the actual long term income, but also has short term responsibilities.

Short term cash flow allows the tenant to buy the property for you, while the property appreciates.  This is why it's important to have positive CF.  Appreciation isn't long term wealth as it takes place.  Appreciation is short term gains that is in the form of frozen cash.  That frozen cash, when defrosted, allows you to move your now li quid cash forward into bigger gains.  The greatest value from equity is its increased buying power in the near future, not long term future.

To say this isn't long term though isn't entirely true.  It is.  Just not in the same property.  The equity/profit you gain is simply moved, with "friends ($$$)", from one investment(s) to the next.

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  • Matthew Thornton
    Member since 2025 · 104 posts · 37 votes
    1y

    Wealth Building is where the real $$$$ is..

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    1y

    Both.  They are intertwined.  Long term wealth is usually misinterpreted as being the same property long term.  It shouldn't be.  Cash flow is applied wrong.  It's the actual long term income, but also has short term responsibilities.

    Short term cash flow allows the tenant to buy the property for you, while the property appreciates.  This is why it's important to have positive CF.  Appreciation isn't long term wealth as it takes place.  Appreciation is short term gains that is in the form of frozen cash.  That frozen cash, when defrosted, allows you to move your now li quid cash forward into bigger gains.  The greatest value from equity is its increased buying power in the near future, not long term future.

    To say this isn't long term though isn't entirely true.  It is.  Just not in the same property.  The equity/profit you gain is simply moved, with "friends ($$$)", from one investment(s) to the next.

    2Reply
  • Arn CenedellaPro Member
    Rental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
    1y

    @Kyle Gagnon

    As @Joe Villeneuve says it’s both. 

    That being said, I think it depends on where each investor is. One side does not fit all. 

    I’m more on the build long term net worth side of the equation until one gets to 60 or 70 years old. 

    Here’s my thought process:

    If one has cash to invest in RE, by definition that means the investor’s income is greater than his or her monthly expenses. The investor current income is more than enough to expresses creating a delta which is then saved and invested in RE. This investor really doesn’t need current income so in my opinion the focus especially for younger people at or entering their peak income years is to invest for the future. They don’t really need current income they have enough. 

    Now I want to be clear properties need to cash flow but the cash flow in my mind isn’t to put spendable dollars in an investor’s pocket but rather to ensure the property is self-supporting. 

    Once an investor reaches a certain net worth, they don’t worry about cash flow or income. They can have as much income and cash flow as they want. 

    And let’s also be clear someone isn’t going to replace a $200,000 a year W2 income by investing $250,000 in real estate. Not happening. 

    My advice in one’s 20s 30s 40s 50s while one is presumably making a good income from their “day job” invest for the future build that net worth. 

    I generally consider $2M in net worth outside one’s personal residence as the net worth goal where financial freedom stats to occur. 

    $2M at 6% is $120K a year $10K a month. 
    Easy enough to get 6% return. 

    Once one stops the day job then perhaps the portfolio can be moved more towards cash flow but don’t forget we are living longer. A healthy 50 year today is expected to live to 90. By the time a 30 year old gets to that age 100 may very well be an average life expectancy. 

    The point being it’s a long road and so for me even at the age of 71 I still look to grow my net worth - the cash flow takes care of itself. 

    [email protected]650-575-6114
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  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    1y

    People focus WAY too much on how investments perform today. If everyone could buy guaranteed, cash flowing properties right now, then we'd all be rich and there would be no need for Bigger Pockets or Grant Cardone. 

    The truth is that building true wealth and financial freedom comes from patience, not necessarily finding some amazing deal or stacking up Sub-to purchases. 

    If you want true freedom, it's gonna take time. I don't know anyone who is financially free and they did it without building equity over time. 

    2Reply
  • Charles Perkins
    Member since 2024 · 222 posts · 161 votes
    1y

    Both are important but appreciation was my main goal.  A property had to have positive cash flow and be able to appreciate and have value add potential.

    Investors have different strategies that can work for them.  My strategy has always been LTRs in good areas that I know well.  Knowledge of your market, good resources and skill development are all important to success in the long run.

    0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    1y

    @Kyle Gagnon 

    For beginners, cash flow should be the top priority unless you already have a large portfolio that allows you to focus on appreciation. Long-term wealth building through appreciation usually outperforms immediate cash flow only when you have the scale and flexibility to leverage tax efficiency, because tax efficiency compounds wealth faster than monthly income.

    even High cash flow properties often do not create taxable income because of depreciation.

    Appreciation or value-add assets can also generate significant paper losses through depreciation and cost segregation, allowing investors to offset other income while building long-term equity.

    This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

    [email protected]941-914-7779
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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    Both. You need cash flow so you don't feed your property but you can still buy in A+ areas that will still appreciate over the long term. Easier said than done in this market but I would prefer long term wealth over immediate cash flow

    [email protected]
    Brick House CPAs53 Reviews
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