Advice on building equity or cash flow

[Jessica Yuan]

Hello everyone, 

I'm looking to buy my first rental property and when I was reading Dave Mayer's Start with Strategy book, he mentioned a very interesting point: 

"one approach that I personally subscribe to is to focus on equity growth early in your career and then shift the balance of your portfolio towards cash flow later. The idea is not to completely ignore cash flow, but rather to seek deals for their potential for equity gains, even if that means a modest cash-on-cash return.

Due to the combined forces of value-add, market appreciation, amortization, and leverage, seeking deals that build equity can generate large amounts of capital with which you can reinvest. If you spend the early days amassing equity, getting cash flow later in your career is relatively easy, you can do it through rebalancing and deleveraging."

Is this the strategy that you guys are using? Any advice on focusing on equity or focusing on cash flow for my first rental property? This will really help with what deals I should look into. I'm currently considering long-distance investing since California is not affordable for me. 

Thank you!

[Stuart Udis]

Equity is how you generate wealth, but cash flow is necessary to cover debt service, operating expenses and to help accumulate reserves. Basically, cash flow is what makes rental real estate sustainable and allows you to exit at the most opportune time. Without cash flow, many fail to realize the ultimate reward.