Cash flow necessary for long buy and hold?

[Chris Ruud]

Hey everyone.  First time poster here, but I've been reading up on real estate investing and this site a ton over the last few months, and I'm hoping to purchase 1 or 2 properties in the relatively near future to buy and hold for a long time.  As in, I'm 30 now and I'd hope to keep them until at least when I'm 65+ and use the rental income to supplement whatever other retirement income I'd have, or potentially sell them at that time to fund retirement. 

My question is this:  For someone in my situation, really how important is initial cash flow?

Trust me I understand that having initial cash flow is preferable to not having cash flow, but as most of you know in my market (Los Angeles area) having initial cash flow is tough when rents are commonly nowhere near the 1% rule.  A 500K house would typically bring in around 2500-2800 in rent.

Here is my thinking, and I'm hoping someone can correct me if I'm seeing something wrong here.  Assume I buy a 500K house now, and my income matches my expenses exactly and am therefore at zero cash flow.  Let's also assume the absolute worst and this property never appreciates, and even worse I am never able to raise rents.  So I move along for 30 years making no monthly money cash flow wise.  

But at the end of this 30 years, I now have a 500K house owned free and clear.  I can sell it and have 500K cash.  So really I have made 500K in 30 years, which works out to be $16,666 dollars per year.  Making almost 17K per year doesn't seem all that bad to me, for the minimum amounts of time and energy required to manage a single house.

And of course, appreciation and rental income is highly likely to increase pretty substantially over the course of 30-40 years, which puts me in an even better situation.  In reality it wouldn't take long for me to be cash flowing, and by retirement I'd be cash flowing pretty well.  So in reality my total profit is more likely to be in the neighborhood of 1M or 1.5M, or could be more.

Again I'm not thinking that cash flow shouldn't matter to anyone, or that I shouldn't also try to get a great deal, just trying to understand my specific perspective.  It just seems to me that with an extremely long buy and hold, you can't really go too wrong. Thoughts?