When buying rentals - Is Cash flow your only consideration

[Account Closed]

When purchasing real estate as a rental. Most of us will spend a considerable amount of time to insure that it cash flows. Not so many years ago I ran into investors that paid much less attention to cash flow and their big consideration was appreciation.

In my opinion cash flow is important but other issues must be considered as well. You might be able to find a property that could cash flow very well for a couple of years and because of local market conditions become nearly worthless.

Seems to me their is more to consider than cash flow. Any thoughts?

[Jon Klaus]

I start with cash flow, but I also consider:

Location--is the property and area likely to grow and
appreciate? Is it relatively close to me?

Security--Is it a safe neighborhood?

Condition and age of property--Don't want a high maintenance property with a bunch of CapEx around the corner.

Marketability--Will it be a desirable rental for quality tenants? Will it be easy to sell when it's time?

Finance-able--Can I easily get financing and when I sell in the future, will my buyer be able to borrow on it?