Appreciation in City? Or CF in the burbs

[Brendon Kerrigan]

Hey BP Community - I am really torn on this dilemma between accepting lower CF in Boston but experiencing more appreciation over time, or just move my money to the burbs or lesser appreciation areas for more cashflow.  Now I know a lot of comments will say it depends on your goals, but at the point in the market, I do feel as though prices are inflated so maybe purchasing a property in the city isn't the best idea because we will likely experience a market downturn soon, and then it'll take that much longer for appreciation to do its work.

Thoughts? Love to get a conversation going on where the market is, especially with residential rates going up over 3% for the first time since July. 

[Tom Wagner]

This tradeoff is something that I wrestle with constantly, and to me it comes down to this: On a $1mm (or less) property or less cash flow is not going to make me rich or materially alter my life in a meaningful way. I still will go to work every day and unless I stack up 10+ properties I am not going to generate six figures in passive income.

However, appreciation can *absolutely* alter my life in a meaningful way. A $1mm property appreciating at 4% per year is worth $1,480,000 in 10 years, so including debt paydown you will have $600,000+ in equity. Change the 4% to 6% and it gets even crazier --> the same property would be worth $1,790,000 in 10 years, giving you $900,000+ in equity.

Cash flow from 2-3 properties doesn't have the potential to change your financial life substantially, appreciation does. Give me the property in the city all day.