Henderson, NV (cash flow vs appreciation debate)

[Bao Do]

Hi Everyone and Happy New Year!

I apologize if this post comes up twice. I don’t think it worked the first time I tried. 

I am new to buying and holding. I live in SoCal where mls homes do not cash flow positive. I have become interested in Henderson and Las Vegas. However, most homes there are now cash flow negative unless you pay 100% cash. 

Do you recommend buying cash flow negative properties and hope for appreciation vs looking elsewhere vs timing the market and waiting on the sidelines?

Do you think Henderson or Vegas rental rates will ever go up enough to make properties cash flow?

Thanks

[Dan Mumm]

1) I would almost never buy a cash flow negative property for an appreciation play. Or even close to cash-flow negative. (For arguments sake, I am assuming cashflow negative AFTER improvements, in a value-add scenario obviously it could make sense).

2) I would NEVER recommend anyone "sits on the sidelines", "waits for the bubble to pop", or "waits for prices to come down".

YOU MUST BE ABLE TO FIND DEALS IN ALL MARKET CYCLES TO BE A SUCCESSFUL INVESTOR.

Nobody knows what will happen to the market. It could keep getting more expensive. Finding deals in hotter markets is harder, but certainly still doable. It will help you develop a skillset that will serve you greatly in a down market. 

If you "wait" for a down market,

1) you will not know when the market is actually "down".

2) by the time you recognize it, it will be too late.

3) you won't have the resources, skill, knowledge, or involvement in the market to make a play.