High Value home worth risk for appreciation?

[David B.]

Hi All - 

I'm a relatively new investor who is seeking to grow a appreciating portfolio first, followed by cash flowing properties.  I have enough assets that I'm not in need of cash flow at this moment, and I'd like to focus on assets that will build me more wealth long term. (that said - since I rely heavily on dividends for income, I don't want to completely negate cash flow either. Nor do I particularly want to lose money). 

I have a property I think I can get under contract in a prime Los Angeles location. It was listed @ 1.6, but I think it will sell closer to 1.8.  It is in an AA+ neighborhood that is hard to replace, and it's really beautiful. It is a turn key property - so not something I can build equity into. 

The rent will just break even with my P+I+taxes and insurance (9,500k monthly) and maybe even fall short. It will not cash flow, unless i turn it into an Airbnb and then maybe... though Ive never owned an airbbnb and that would be a learning curve.  It has 2 bedrooms, a pool and a guest house, so  maybe not ideal for airbnb (i'm told airbnb thrives with 4 bedrooms) but still an excellent property. 

My question is it worth buying and holding even if it doesn't cash flow, and may in fact cost me money? I know many believe we're at the top of  the market, and that there may be a correction in the future. However, this is the type of property (in the right area) that could very well appreciate almost a million dollars in the next seven - ten years. 

I've heard others say that with inflation, they're banking on appreciation and buying high desirable properties to profit from it. That is in essence what I would be doing with this property - buying a high value assets that may cost me money in the short term, but in the long term will grow in value. That's real estate investing 101, but I guess I'm wondering if that's worth doing in such choppy economic times?

I wouldn't be considering this investment strategy if i didn't believe the property was valuable. Otherwise, I would much prefer a BRRR strategy or cash flow or something that I have a cleaner exit on. However, I thought I'd ask you more experienced investors if you have any thoughts about this. Any and all are appreciated.

Thank you!