Cash flow vs Appreciation and Upkeep

[Scott Rogers]

Hello BP,

I am about to close on my first rental property and thinking about what I want my portfolio to look like. The first rental was an older (1920) duplex in ok condition and it should cash flow around $300 (with very conservative vacancy and upkeep budgets).  For my second property I have been looking at nicer, newer side by side duplexes that are basically cash flow neutral using the same parameters. 

It's very enticing to have nicer properties that should have fewer maintenance issues , attract better tenants and possibly appreciate faster. However if you are in the cash flow game the older properties will generally have better returns.  

Of course the other option is to wait for a great deal on a nicer property that needs some rehab but those deals are not very common these days.

thoughts?

Scott

[Ned Carey]

@Scott Rogers Where I work in Baltimore the housing stock tends to be quite old. Most of the properties that I look at would be build 1920-1955. I always figure in significant renovations before I rent. By buying a fixer upper I am able to be all in after repairs for a lower price and I know the systems will be updated and pretty reliable.

Old  houses do not scare me. I just figure in the extra cost. I absolutely would not buy an old house that is in supposedly "Dated but Rentable" and rent without renovating it.