Cash flow vs appreciation (out of state)

San Diego, California
General Real Estate Investing
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Cash flow vs appreciation (out of state)

Placeholder PlaceholderPro Member
Member since 2026 · 1 post · 7 votes

I'm an agent and just starting to look at doing out of state buy and holds. My plan was to purchase a couple houses at a lower price point, put larger down payment, cash flow, than let that sit to reinvest into new deals. If I can buy 2 or 3 for a few years, I should be able to multiply faster. I'm thinking in the 150k range. My question is, is that short sided? Should I spend the extra in better markets that have a higher appreciation, or is it ok to use cash flow to slowly work into markets that cash flow less but have better long term benefits? I have a renovation background, but I'm not really trying to play the value add game out the gate in markets I don't know. 

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Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
8mo

Since you are an agent I'm guessing you know the pros and cons of the options. Personally I don't want C&D properties and rarely B either. Generally my cash flow is more modest but with reduced tenant drama and an anticipated appreciation as well as ease of resale. 

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  • G. Brian DavisPro Member
    Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 873 votes
    8mo

     Early on, cash flow buys you time, optionality, and staying power, especially when investing out of state. Properties that support themselves reduce pressure and let you reinvest from a position of strength.

    Higher appreciation markets can make sense later, once your base is stable and you’re less dependent on each deal carrying its own weight. Many investors start exactly where you’re describing, then redeploy cash flow and equity into markets with stronger long term growth once the foundation is in place. The key is being clear on your phase, build the engine first, then decide where to steer it.

    2Reply
  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    8mo

    Starting with a couple of $150k cash-flow rentals in one market is a smart way to learn out-of-state without getting crushed by surprises. I’d just avoid “cheap for a reason” areas, build a strong local team first, and then move into higher-appreciation markets once your systems and reserves are solid.

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  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    8mo

    Since you are an agent I'm guessing you know the pros and cons of the options. Personally I don't want C&D properties and rarely B either. Generally my cash flow is more modest but with reduced tenant drama and an anticipated appreciation as well as ease of resale. 

    3Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    8mo
    Quote from @Placeholder Placeholder:

    I'm an agent and just starting to look at doing out of state buy and holds. My plan was to purchase a couple houses at a lower price point, put larger down payment, cash flow, than let that sit to reinvest into new deals. If I can buy 2 or 3 for a few years, I should be able to multiply faster. I'm thinking in the 150k range. My question is, is that short sided? Should I spend the extra in better markets that have a higher appreciation, or is it ok to use cash flow to slowly work into markets that cash flow less but have better long term benefits? I have a renovation background, but I'm not really trying to play the value add game out the gate in markets I don't know. 


     Good stuff man. Choose a good cash flowing market in the Midwest where you can put down 15% down and buy a cash flowing property.

    Tons of tech companies are investing there like intel, google, amazon. Good market for cashflow and strong appreciation.

    I've got 28 units here and sold over 120 properties this year to OOS investors in my market.

    [email protected]614-802-5698
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  • Mike PaolucciBusiness Member
    Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 501 posts · 553 votes
    8mo
    Quote from @Placeholder Placeholder:

    I'm an agent and just starting to look at doing out of state buy and holds. My plan was to purchase a couple houses at a lower price point, put larger down payment, cash flow, than let that sit to reinvest into new deals. If I can buy 2 or 3 for a few years, I should be able to multiply faster. I'm thinking in the 150k range. My question is, is that short sided? Should I spend the extra in better markets that have a higher appreciation, or is it ok to use cash flow to slowly work into markets that cash flow less but have better long term benefits? I have a renovation background, but I'm not really trying to play the value add game out the gate in markets I don't know. 


    Both methods can work. I've got cashflow properties and I've got appreciation properties with lower margins. I scaled my cashflow properties and have started to 1031 into better neighborhoods recently and have been pretty happy with my results from beginning to end. Few speed bumps with the cheaper properties but it's all part of the journey. 

    Happy to chat further 

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  • Keith Mintz
    Real Estate Agent · San Diego, CA · Member since 2023 · 189 posts · 88 votes
    8mo
    Quote from @Placeholder Placeholder:

    I'm an agent and just starting to look at doing out of state buy and holds. My plan was to purchase a couple houses at a lower price point, put larger down payment, cash flow, than let that sit to reinvest into new deals. If I can buy 2 or 3 for a few years, I should be able to multiply faster. I'm thinking in the 150k range. My question is, is that short sided? Should I spend the extra in better markets that have a higher appreciation, or is it ok to use cash flow to slowly work into markets that cash flow less but have better long term benefits? I have a renovation background, but I'm not really trying to play the value add game out the gate in markets I don't know. 


    Not short-sighted at all—your thinking is actually very logical, especially early on.

    I’m an agent and investor as well, and one thing I’ve seen repeatedly is that cash-flow-first properties can be a great engine for growth if the cash flow is durable and the market fundamentals are solid. Where people tend to get burned is assuming lower price point automatically means lower risk when buying remotely.

    Appreciation vs. cash flow doesn’t have to be an either/or. In many secondary markets, B/B+ areas tied to real employment drivers can offer both over time.

    I also wouldn’t rule out creative strategies that don’t require heavy value-add—things like rent-by-room, furnished or mid-term rentals, or optimizing tenant profiles. I’ve had strong results with these approaches, and they often provide upside without relying on major renovations.

    Using cash flow to step into lower-yield, higher-appreciation markets later is a very viable path—just make sure the early deals give you flexibility and multiple exit options.

    2Reply
    • Greg ScottPro Member
      Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
      8mo
      Quote from @Keith Mintz:
      Quote from @Placeholder Placeholder:

      I'm an agent and just starting to look at doing out of state buy and holds. 

      Thank you for posting this. Years ago BP started the idea that there are two kinds of markets, Cashflow Markets and Appreciation Markets.   That is a very dangerous idea.

      In reality, some Cashflow Markets, have experienced great appreciation and some have not, and then there are markets that do not give you cashflow.  While they have been called Appreciation Markets, some of these markets have actually seen declines in values (e.g. Austin). I can only conclude that the reason they are called Appreciation Markets is because the only way you can make money is IF you get appreciation.  Sadly, that is not guaranteed, which is why this idea is dangerous. 

      An investor that is starting out and willing to buy out of state, should be looking for both cashflow AND appreciation.  

      Appreciation is usually the result of an imbalance between supply and demand.  Look for markets with population and job growth, without the corresponding supply increase.

      1Reply
  • Juan YepesBusiness Member
    Lender · Miami, FL · Member since 2025 · 127 posts · 36 votes
    8mo

    Hi there,

    It seems from your post that your primary focus isn't cash flow or appreciation, its scale. Adding a large down payment with the intention of saving the cash flow for another down payment is on the slower side of how you can scale.

    If you want to buy several $150k properties to rent, I would instead look into 2-4 unit multifamily. You still get the low cost per door, you still get diversification of rent inflows, you avoid single family home class B-C properties, and you benefit from having all your units in one place.

    Also consider if you were to occupy one of the units in a multifamily in California, you'd be able to benefit from owner-occupied low down payments. So might be worth weighing the large out of state down payment with the high California cost. With low down payments, you could scale faster without needing large cash flows.

    If you're interested in working through these ideas, feel free to DM.

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    8mo
    Quote from @Placeholder Placeholder:

    I'm an agent and just starting to look at doing out of state buy and holds. My plan was to purchase a couple houses at a lower price point, put larger down payment, cash flow, than let that sit to reinvest into new deals. If I can buy 2 or 3 for a few years, I should be able to multiply faster. I'm thinking in the 150k range. My question is, is that short sided? Should I spend the extra in better markets that have a higher appreciation, or is it ok to use cash flow to slowly work into markets that cash flow less but have better long term benefits? I have a renovation background, but I'm not really trying to play the value add game out the gate in markets I don't know. 


     A lot of people use this strategy. There are a lot of people bashing the strategy right now, but I know a lot of investors who have been successful with it. Get a cheap C-class rental, or a few then upgrade in 5ish years

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  • Bo SmithPro Member
    Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
    8mo

    Cash flow vs appreciation is the classic debate, but here's what most miss - liquidity timing. Those cash flow markets can take 6+ months to sell if you need to pivot or reinvest. Are you planning exit timelines or just focusing on the entry?

    2Reply
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 961 votes
    8mo
    Quote from @Placeholder Placeholder:

    I'm an agent and just starting to look at doing out of state buy and holds. My plan was to purchase a couple houses at a lower price point, put larger down payment, cash flow, than let that sit to reinvest into new deals. If I can buy 2 or 3 for a few years, I should be able to multiply faster. I'm thinking in the 150k range. My question is, is that short sided? Should I spend the extra in better markets that have a higher appreciation, or is it ok to use cash flow to slowly work into markets that cash flow less but have better long term benefits? I have a renovation background, but I'm not really trying to play the value add game out the gate in markets I don't know. 

     @Placeholder Placeholder

    Starting with cash flow is usually the safer, smarter move, especially out of state. Appreciation is great, but you can’t pay bills with “maybe someday” equity, while solid cash flow gives you breathing room and lets you stack reserves and reinvest faster. That’s why a lot of investors begin in lower price point Midwest markets where the rent-to-price ratios actually work, then later roll profits into higher appreciation areas once they’ve built momentum. If you’re not trying to do heavy value-add yet, steady, boring, cash-flowing rentals in places midwest can be a great foundation before getting fancy.

    [email protected]614-418-6081
    1Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 696 votes
    8mo

    My Take on Cash Flow: 
    - Cash Flow is a hedge against corrections. Cash flow (in my portfolio as a whole) covers my expenses.
    - Forced Apperception (BRRRR or buying at a discount) is also a hedge against corrections. Forced appreciation lets me build equity from the outset of the investment, so if I need to fire-sell for an unforeseen reason, I will not be underwater.

    My take on Market Appreciation:
    - This is the least predictable, but historically, where you will make the most money. Real Estate values nationally have never declined over any 10-year period.

    Debt-Paydown is a result of time. This is the easiest to predict.
    Tax benefits also depend on time, but you need good bookkeeping & tax advisory services.

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