Where do landlords actually make the most money (profits) ?

[Matt R.]

There is so much misinformation on this site it is crazy.

Here are the facts; 

For total profits, cash flow plus equity since 2009 the top 3 locations are San Francisco, San Jose and LA.

Since 2000, that is LA, SF and San Diego.

For the sake of discussion... why do you think that is the case?

[Austin Fruechting]

@Matt R. I'll take a stab at answering the question as to having the highest total profits....

Any area that has something unique to offer that people want will have high appreciation because of basic laws of economics.  Add to that many of those areas were hit pretty hard with the 2008 crash, and therefore had a tremendous opportunity to rebound.  As such they had incredible gains in that period of time since then in both appreciation and rental growth.  I believe going forward coastal towns will still always provide the greatest appreciation opportunities due to the fact that there is a very limited supply of coastal properties. History has proven that even pre crash.

To @David Faulkner 's point(s) - I don't think it's that people are appreciation haters, I think people go after the cash flow (and the areas that provide cash flow) because purchase prices are lower and they can move quicker along the path. They are looking for financial freedom in the shortest window, not just net worth on a balance sheet. I doubt I could have obtained financial freedom in under 7 years given a very meager starting position if I were investing in LA and San Fran; mainly because the amount needed for down payments and not having the cash on cash return to immediately funnel back into the machine.  

If financial freedom is the goal and you're an average investor starting with say just $25k, cash flow on cheaper properties is the way to go. LA/San Fran/etc is out of reach. $25k isn't going to get you anywhere in those markets. They'd have to diligently save for another several years just to get one property. However; if you are looking for long term wealth building and net worth growth, those types of areas are definitely where you want to be in. 

Now that I have reached my goal of financial freedom, I don't know that I'll be investing my own money in these plays much going forward. My plan is to begin stockpiling some cash reserves over the next few years. Then the next time one of those types of markets takes a hit hopefully I can pick up a house or two and get some awesome appreciation and net worth building and be able to be a part of getting the highest total profits.  But even with all I have that will take quite some time of saving up to get even one decent property then.