My cash flow dilemna

[Fred Stevenson]

So it appears to me in my local market and also at the macro level around the country that properties that cash flow nicely i.e. >1% rule are also in markets or neighborhoods that don't seem to appreciate that much.  I have a full time day job in which I make a nice income. I'm also a ways away from retirement. So as i diversify into real estate I'd rather own properties that have a greater chance of appreciation over time with lower cap rates versus high cash flowing properties that are in less desirable neigjborhoods or cities  that owner occupants are leaving.  

For example, I'm looking at a house in Baton Rouge (which is my home) in Sherwood Forest Neighborhood. It is a 4bdr 2.5 bath on the market for 156k. It is newly renovated and won't need any rehab. It will rent for 1800.  This home is going for 59per square foot while others are comping at 67per square foot. Sounds like a great cash flowing property right with a little bit of equity built in? The problem is that owner occupants are selling their homes like crazy in this neighborhood and it is becoming a "rental" neighborhood. So in six or seven years my fear is that homes in the neighborhood will be selling for 50per sq ft. When I look at the "hot neighborhoods" that are in the path of growth it is much more difficult to buy properties at a discount or find properties cash flowing above 1% rule.

 I find this same type of scenario to be try at the macro level.  For example,  I hear great things about Orlando in terms of the economy and the future, but the properties I've looked at have cap rates <4%.  What is a passive investor to do who prefers equity growth over cashflow without taking a bath?  Any recommendations on strategies or cities that fit what I'm lookin for would be greatly appreciated.  (I am willing to buy turnkey, but I find they are often focused on cashflow versus equity growth). Thanks BP community.