Little or no cash flow banking on property appreciation

[Thomas Haregot]

Hi Folks,

Very new to the real estate investment world.  My wife and I have been looking at some property near downtown Houston for a first investment, where the market seems to be pretty hot.  The idea had been to rent the property for the first few years and move in ourselves, when we become empty nesters.  We have since abandoned the idea of moving in ourselves, so are looking to just rent and sell ten to fifteen years down the road.

The properties are in great shape and the rental market, while available appears to be low, relative to the price of the homes. I have used the tips I have read hear and listened to on the various pod casts for calculating NOI and cap rates. My best cap rate is 1.75%, with monthly cash flows less than $100 a month. In some cases it is break-even or slightly negative.

My question is whether it is prudent to invest in property assuming that it appreciate a great deal down the road ?