Buying in an appreciating market vs. buying for cash flow

[Rachel Simpson]

Hi all. I am analyzing a deal that is outside my comfort zone and I am very much in my head and overthinking it. I am hoping for insight from more experienced investors.I currently invest in a class C (probably C-) area that provides fantastic cashflow but will likely not appreciate as well as other markets. 

I have the opportunity to purchase a duplex (Class B neighborhood) in an area that is seeing job growth and with steady increase in both rents and real estate prices. Professionals/ hospitality workers are moving to the area as they are being priced out of the nearby tourist areas where they work. It is also near a large naval base that is going to be adding more jobs, as well. Large development of very nice single family homes being planned for in that area. 

Here is the catch. Right now, it will cashflow MAYBE $50 a month when considering capex, maintenance, etc (Thank you, interest rates). It would be an appreciation buy, mostly. INSIGHT PLEASE! I feel like I need a property like this to balance out my doors in a less savory market.

[V.G Jason]

If you're buying in a growing area, it's a good zip code and it's all positive momentum. And the house is healthy. Don't worry about little bit of cash flow. Just own the asset. 

Anyone that thinks cash flow is the sole indicator for the deal to be investable is not an investor. They've either been only investing in a low rate environment or are the type to evaluate deals at the Year 1 mark. These people don't survive downturns as much as they say cash flow will protect them. They don't realize there's no cash flow in a downturn when tenant doesn't pay or rent has to be reduced. And now their trash house remains trash. 

If you're investing in real estate, take a long(er) term approach. Just remember there's only so many parcels in good areas. There's a scarcity to it.