Negative Cashflow, Appreciation for First rental property?

[Alex P.]

I'm a first-time home buyer looking to purchase my first rental property. I'm wondering whether negative cashflow for appreciation is a bad move for someone starting out.

I have a strong interest in buying in Folsom, CA. Its much cheaper for newer homes than the bay area, schools are all 9+/10, city has very high ratings for safety and quality of living, and the area looks to have a lot of growth in the next few years.

Only thing is negative cash flow. I can only put down up to 10%, so total monthly (with pmi, taxes, interest etc) will be around $4k-5k. Avg rent per room in the area is $900-1200, and avg rent per house is $3.2-3.6k. I plan to hold longterm and rent by room MTR/LTR, but assuming vacancies and at least 2 rooms occupied, I'll be short $2k-3k most months until rents follow the upward trend of home prices in the area or my monthly decreases.

I understand the huge emphasis on the cashflow-focused approach on BP, and that following appreciation is a gamble. However, if you're from/familiar with Norcal/sac, I'd like your advice on this move and projections for the city. I have a decently comfortable salary, so although it'll slow the rate at which I can save for the downpayment of another property, I can manage covering the negative cashflow. Also, despite all the new developments in the area, properties are selling like wildfire (in the case of TM, even before the models are built) and the number of available homes at this lower price range are becoming scarce. So, I'd like to make a decision before it's too late, or more buyers come into the market and increase competition.

Property Info: 550-600k, 3-4 rooms, loft (can later turn into an additional 4th/5th room to add value), 1800-2200 sqft, 2 car garage, hoping for a lot size suitable for an ADU/DADU