How to think about cash flow & appreciation

[Ethan M.]

I'm hoping to get some perspective from people here on an experience I'm having in current markets. I would like to put some money into a property that can bring in some cash flow, or at least break even, and I want to do this in a market likely to have decent appreciation. The local markets that make sense for me are all coastal and have super high price-to-rent ratios so cash flow is very hard to achieve. I just never see any deals when I am sent properties. I've got a realtor that, however, is suggesting that I rely on cash flow going positive due to rent increases. This doesn't feel right to me. Rent feels sticky. Increasing it seems harder since it's a social decision that can affect tenants etc, and I've got an ethical system that will lead me to be reasonable about rent increases. 

So...my questions are:

1) Is there any legitimate reason that a realtor might be suggesting to me that I can rely on cash flow going positive due to an increase in rental income even in, say, a market like Seattle? When I use the rental property calculator on this site, I just don't see that happening with its default setting of 2% income growth;

2) What expectations can one set about income growth via rent increases in this environment. I've read a number of sources (including https://www.cbre.com/insights/...) that forecast rent increases in many types of markets (downtown areas, suburbs), but what might that translate into in terms of reasonable assumptions for % increase? 

The reason I'm asking these questions is that I'd much rather invest in a market that is in an area that I know and that I am likely to be. I can go the whole out-of-state route but it is, as many have acknowledged, just more uncomfortable. So if there is in fact some way to invest reasonably in a high octane market without being some super cash-flush investor, then that'd be great. I guess this comes down to: is there a way to balance the difficult cash flow situation in coastal markets against their attractive appreciation?

Any help with these questions would be greatly appreciated!  

[Lane Kawaoka]

I used to think cashflow was everything when I was buying turnkey rentals in 2013.

Today I see cashflow as oxygen... it keeps you alive during tough times. But legacy wealth is not created by cashflow but forced appreciation.