Invest for Cash Flow or Appreciation- Which do you favor more?

[Tim W.]

I was curious to get your thoughts on whether you invest in RE for Cash Flow or Appreciation?

 In an ideal world, we'd look to get both, but with today's higher interest rates and rising home values, it seems harder for deals to cash flow. 

I've decided to focus in Pittsburgh where the Price to Rent ratio is quite reasonable. I've built my business plan for 2025 to go after Cash Flow first, appreciation second, in B and C+ areas. But I also realize many people choose the direction of Appreciation first.

In my hometown market (not Pittsburgh, but central NJ area), few small to mid size multi family properties could come close to cash flowing positively. People seem to buy mainly for appreciation, but I'm not sold appreciation will continue to rise the way it has the past 5 - 6 years, so feel like CF is the safer investing avenue for me. Would love to get everyone's thoughts!

[Jay Hinrichs]

Quote from @Terra Padgett:

While cash flow can be nice to see each month, it can be fleeting and inconsistent. As expenses fluctuate (property taxes, insurance, maintenance items, etc), the cash flow will be up and down and unreliable. Cash flow, especially in this day and age, should keep the property afloat and paying for itself without you having to put more money into it. 
Appreciation on the other hand is the biggest piece of the real estate pie. It takes longer to realize, but the gain is worth so much more than a couple hundred dollars of cash flow a month. And historically, real estate has a proven track record of appreciating over time. So while cash is necessary to keep the property afloat, I invest more for the appreciation of the asset. 

its funny how this changes with time and the market on BP  if you asked this question 5 to 7 years ago you get drowned out with the cash flow is the ONLY thing and appreciation is for gamblers my self I have always been about making appreciation games in RE.. by either value add building a new product or buying foreclosure and flipping or lending money and getting instant 12% plus returns .  ON the more risk type product we do land speculation and Land entitlements but the returns blow most any cash flow at the the same dollar amount out of the water.. But you do risk losing money..  One land speculation I bought 4 acres in sonoma County CA ( wine country) in 96 for 27k it was unbuildable at the time ( could not get a septic system on it) Well city grew to us The Graton Casino comes in right across the street and we sold a few years ago for over 2 mil to a land assemblage investment company. So I dont know  ZERO cash flow for what 25 plus years pay 300.00 a year in prop tax. so spent what less than 10k to own it then cash out and 1031.. Or what could I have bought for cash flow for 27k back then. Well nothing on the west coast.. ???  I have another one were I optioned 120 acres that just got brought into long term planning for chips act. paid 5 million for it and spend 10k a month negative.. Once its approved it will be worth about 100 million. and the 10k a month is all principal there is no interest carry.. so been it it 15 years already.. So I dont know good investment maybe.. cooks off in the next 5 years we make some pretty serious dough.. Probably could have done about as good with cash flow RE.. but U cant buy 5 mil cash flow prop with nothing down like we did and have a zero interest carry.. So its really all depends right.