Appreciation VS. Cash flow - The clash of the titans....

[Eddie Ziv]

I recently (...like an hour ago :mrgreen: ) went through this thread exploring the old argument between the cash flow guys and the appreciation guys.More specifically MikeOH and Nationwidepi (Mike and will) and off course some others.

http://www.biggerpockets.com/forums/12/topics/19548-cash-flow-vs-appreciation?page=1

I have one word - Fascinating!

I strongly urge all the newbies( and the seasoned ..) out there to go back and read it, aside from the personal back and forth between Mike and Will which wasn't really personal but a clash of philosophies, the thread really put the light on the issue and the various approaches.

My only two cents in this is that, if you can, why not have both. Diversity never hurt any business. I own properties in Texas for appreciation and in Alabama for cash flow and whatever I don't make in cash flow with my Texas investments, is paid by the cash flow properties in Alabama. My margins in Texas are small anyway, but who can cash flow in Austin with 20% down this day...?

Also, I think that eventually, if you buy properties using fix rate loan, they will become cash flow. It make take five, seven or ten years, but they'll come around.
:wink:

Happy reading....

[Kyle K.]

One must not acquire income property that loses money. If you're obtaining a commercial building, you'd be hard-pressed to do that anyways given generally tighter lender standards and a minimum DSCR you've got to reach.

But the big thing to note is you can have your cake and eat it too! Why sacrifice appreciation for cash flow? Why not have both? Its absolutely possible!

But never buy a property that is a money black hole with expectations of appreciation. That's just too much undue risk for me, especially if you're doing that in the more undesirable locations in the nation.