Is an expensive market an exception to the cash flow rule?
The question:
I would like to know if there is an acceptable exception to the "cash flow is king rule". I am in full agreement that a positive cash flow is a very important goal, due to the fact it insulates you from gambling on appreciation, equity, and rent increases.
I'm looking at the Seattle area (I live here) to make my first multi family ( 2/3/4plex) purchase. The outlook is very bleak in terms of properties that would generate a positive cash flow.
I'm wondering, for those of you that preach "positive cash flow is a requirement":
Would you relax this rule in a very expensive area, where duplex/triplex/quadplex prices are around 1 million? I would think that a small negative cash flow margin would be acceptable due to the much larger equity gains you are receiving (compared to a 100k property that has good positive cash flow).
I would love to know your thoughts.