Why Is cash flow so important?

[Chris Mendoza]

So I'm new to investing and plan on purchasing a house then converting into a rental after a year or two. I am just wondering why cash flow is so important, when there is still the loan pay down and appreciation as a mean of increasing overall profit. 

I'd love to hear your guys thoughts on this subject! Thanks in advance.

[Mike Dymski]

Profit in real estate comes from monthly cash flow, principal reduction, and appreciation (forced or market).

The commentary on BP is so binary but real estate investing is not.

Appreciation and debt pay down is only realized when you sell?  Tell that to other members who have executed six and seven figure refinances.

Appreciation is speculation?  Nonsense, too binary.  Buying properties in hot markets at retail value with no value add is speculation.  We don't need to discuss those obvious reckless strategies...those people are not on BP learning how to invest prudently.  The value investors we know on BP are buying properties below market, adding value, and/or purchasing in locations where they are very comfortable with their forecast of long-term appreciation (and rent increases).  If someone thinks all value investing is speculative, they are mistaken.

Many investors own both high and low GRM properties and, done correctly, they are both profitable strategies. I am currently investing for cash flow (and always adding value) but will also value invest during the right market conditions and with the right opportunities.