sacrifice cash flow for a better neighborhood

[Michael Beninati]

Hi,

I am new to investing. My business partner and I recently bought a duplex for 39,000 cash which should make about 1400.00 in gross rental income per month, which we feel good about. Our plan has been to buy low which means buying in lower income neighborhoods to maximize cash flow.

My neighborhood is quite established and is currently experiencing a growth spurt with a large mill being renovated to apts and retail, at least 2 other large scale apt/condo projects under construction. The light rail is also scheduled to be in operation in 4 years providing commuter transportation downtown.

We have the opportunity to buy a house listed for 133000 in a great location in this neighborhood. We could probably cash flow about 200.00 /month conservatively. This house is renovated to the point where we could get renters in immediately, complete with appliances, and in a highly rentable area.

I know you're not supposed to gamble on future appreciation, but there are barely any houses available in this price range, the location could not be much better, and the yard is fenced and large.

I was hoping to get some experienced investor opinions regarding the concept of receiving less cash flow( but still positive), for the potential of a huge increase in value not so far down the road.