Appreciation vs. cash flow

29 Replies

This is also specific on what type of property your buying and what market your in. I’m a SFR guy in my area/market and I’m currently in Escrow on a property that is valued at 225K as it sits and ARV of 235K. Purchase price is 165K and it will rent for about $1,325. Run your math and tell me you would not buy this property because it doesn’t cash flow. 2/2 1000SQFT and I don’t need to fix anything prior to renting. I’m putting this property on a 15 year loan due to my situation and circumstance and how much money I make with good security if market turns some. One thing about condos is HOA’s usually don’t go down over time so it can take away some of your rent increases as well. Now of course multi units are different than this and every market is different but for the deal I explained above is a total equity refinance play for me in this tough market I’m in. Very difficult to find a SFR that will give a good cash flow in this area I’m in so it’s pretty much a purchase at a great discount and let the market do its thing as you wait, tenant pays it down and refinance/sell or 1031. It’s not always about cash flow in all areas. Gotta take what you can get sometimes.

Originally posted by @Jason Chan :


@Russell Brazil can i bother u for more details? where in DC? i just rushed into a condo that is great to live in but wouldnt make a ton of sense (financially) if i didnt enjoy living in it...


Account Closed This was a popular strategy before the crash in 2008. People would brag, especially in CA about having only a $200-$300/mth negative. Banking on variables that you have no control over is speculative. In 2012 when the real estate market was at the bottom, this made a lot of sense. A lot of markets are above their pre crash levels today and continued appreciation is uncertain. Personally, I think this is a risky time for an appreciation play but every market is different.

I lived in Silicon Vally for 30 years and saw tremendous price appreciation, and saw lots of folks lose their shirts too. It is timing and good fortune when it happens. Wait too long and you completely miss the pendulum swing. For me it MF investing is all about cash flow; with some selling now and again.

I think it depends a lot on where you’re at in your investing journey/what you’re looking for. With appreciation, you won’t be able to pull your money out for a few years at least even if you bet correctly on the market. With cash flow, you will have a smaller amount of money consistently now. So it all depends on the game you’re playing now. We wanted cash flow so we can snowball our earnings into more down payments quicker to make this our careers

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