Are You Buying for Appreciation or Cash Flow Right Now?

Question

Has your investment focus shifted recently?

Bo Smith · Answer

100% cash flow now. Appreciation is a bonus, not the plan. The shift happened when cap rates normalized and you could actually make monthly cash flow work without needing home prices to jump 10% a year to justify the deal.

Five years ago you were forced to bet on appreciation because cap rates were compressed below the rate environment. You had to chase appreciation or you were leaving money on the table. Now that interest rates are where they are, cash flowing rentals actually work as boring, reliable investments again. You don't need the market to cooperate.

That said, I'm still running the math on both sides when I look at a deal. Appreciation is still there if you're buying right, and it's still a nice tailwind. But if a property doesn't work on cash flow and I'm banking on 5% annual appreciation to make it pencil, I'm passing. Are most people in your market still chasing appreciation plays, or are you seeing the shift toward actual cash flow numbers?

Bo Smith · Answer

Kenneth's take is solid -- cash flow pays the bills, appreciation is the bonus. But I'd add a layer to that: the market you're in matters. Some markets are cash flow plays, others are appreciation plays. You can't force it.

In 2026, I'm seeing two different plays working. Cash-flowing markets (B and C class) are where cap rates are still decent -- you can actually get 6-7% on the rental income. But appreciation markets (A class, path-of-growth areas) are where the real wealth builds long-term, even if cash flow is thin at 2-3%.

I used to chase cash flow everywhere. Now I'm selective -- I'll take thin cash flow in appreciation markets because the equity gain over 5 years crushes the monthly income anyway. The opposite is also true -- I won't chase appreciation in dead-flat markets just hoping.

Where are you seeing the best opportunities right now -- cash-flowing markets or appreciation-driven areas?

Bo Smith · Answer

Kenneth's take is solid -- cash flow pays the bills, appreciation is the bonus. But I'd add a layer to that: the market you're in matters. Some markets are cash flow plays, others are appreciation plays. You can't force it.

In 2026, I'm seeing two different plays working. Cash-flowing markets (B and C class) are where cap rates are still decent -- you can actually get 6-7% on the rental income. But appreciation markets (A class, path-of-growth areas) are where the real wealth builds long-term, even if cash flow is thin at 2-3%.

I used to chase cash flow everywhere. Now I'm selective -- I'll take thin cash flow in appreciation markets because the equity gain over 5 years crushes the monthly income anyway. The opposite is also true -- I won't chase appreciation in dead-flat markets just hoping.

Where are you seeing the best opportunities right now -- cash-flowing markets or appreciation-driven areas?

Joe Villeneuve · Answer

Always buy for cash flow.  The cash flow gets me to the point where the appreciation grows and can sell the property, then move forward.

Doug P. · Answer

@Kelly Schroeder Nothing has changed for me in 26 years. I'm still selling the appreciation for cash flow.

Elise Bickel Tauber · Answer

I'm seeing a lot more investors buying for strictly cash flow. A few years ago it wasn't as heavy on cash flow and more on general appreciation but now I'm seeing so many people trying to get ahead monthly instead of big picture. And in Pittsburgh, if you take care of the property correctly you will also get the appreciation but that surely isn't focus #1.

Kenneth Garrett · Answer

Always buy for cash flow and let appreciation be the bonus.  Cash flow pays the bills and puts money in your pocket.

Be open to different markets.  It doesn’t have to be in your backyard.

Are You Buying for Appreciation or Cash Flow Right Now?

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