California Investing Strategy - Cash Flow or Appreciation

[Jake Jaenicke]

I have lived in Southern California my entire life and I never had the desire to purchase property here. I saw the cost of a small little house, and what that could buy you elsewhere. It wasn't until I got interested in real estate for the investment opportunities that I started to evaluate the Southern California market again.

Many of the books I read, podcasts I listen to, and forums on BP all state cash flow is king. My question to you is this:

In a market like San Diego or New York, where housing prices are so high, but the rents are not equally high, cash flow is hard to achieve (initially). However, housing prices continue to increase and historically will go up. Many of the mid-west regions people are saying they are getting great cash flow, seems to be just that, cash flow only. These areas do not necessarily have the wealth-generating opportunity of appreciation like my market. Would you agree that cash flow isn't everything? It does depend on the stage of life you are in (I am in my 30s, so I thankfully have time to build wealth and do not immediately need cash flow).

If anyone reading this knows of any duplex units in the San Diego area, I am looking! Happy Monday y'all.

[Cody L.]

It's not that homes are too high ... it's that rents are too low (in relation to the purchase price).

I have lots of 'high priced' homes in Houston that I lease.  I bought a bunch of $500k homes I rent for $4,000/month.  Meanwhile, in San Diego, my neighbor who has a house worth about $1m just leased his house out for $4,500/month.    Told him he should sell the home, buy two of the ones like mine in Houston, and nearly double his rents.