More cash flow or more appreciation, which would you choose?

[Jack B.]

Though the title doesn't allow enough space to fully type out a bit more detail, it's not quite as simple as picking cash flow over appreciation. Consider these two scenarios and their risks and issues.

Two scenarios in my hypothetical example:

Option 1:

You have 3 million to invest. You buy 38 properties (37.5 rounded up) paid in full at 80K a piece, each cash flowing 1K a month after all expenses including vacancy, capex, etc. 

456K cash flow a year. Appreciating 300K a year. (3 million in RE at 10% a year). Since these are all paid in cash, there is little risk, and there are no hoops to jump through for portfolio loans. 

This is literally a real life example of what was possible in Tacoma WA when I bought my first house paid in full at the near bottom of the market. This IS actually possible.

Option 2

Use the 3 million to put 125K down on 500K houses closer to Seattle at the bottom of the market. You end up with 24 units, cash flowing $500 a month each. 

144K a year cash flow is what you end up with. Appreciation on the 12 million in real estate is 1.2 million a year at 10%. Risk is that it's all leveraged. You do have less properties to manage though than the above scenario but you also have to jump through a lot of hoops for portfolio loans.

This was literally a real life possibility at the bottom of the market in the greater Seattle area a few years ago. 

Which would you choose and why?