investing in fantastic cash flow but no appreciation

[Eric Calabrese]

hey everyone, lately I've been trying to get my first property putting in offers in areas with great returns and maybe 5-8% COC return.. But truthfully in a hot market rents don't align with price. However I'm finding way better COC returns in areas that aren't really appreciating. which you you prefer? Mind you the vacancy percentage is low in the area not seeing much appreciation too.

[Andrew Johnson]

@Eric Calabrese Personally, I don't seek the *maximum* potential of either.  I don't want to invest in San Francisco, lose $__K every month, and have an educated hope that I'll make it up on appreciation.  Maybe it will happen over 15-30 years but I don't want to have a slow bleed while I wait.  Nor do I want to go looking it a Memphis warzone or dicey parts of Toledo to buy up $35K properties for massive cash-flow.  I don't have the temperament to own or manage a property manager for those properties.  It's just not me.  In a lot of cases your temperament has to match the kind of property that you want to buy.

That said, a lot of this has to do with what you want to do with the money (read: profit).   Do you want to buy groceries with it?  If so, appreciation won't help you much.  Are you already in a high tax bracket?  If so, waiting for an exit until post-retirement (i.e. banking on long-term appreciation) is a completely viable strategy.  Do you want to improve the property with sweat equity to improve your return?  That probably won't help in a warzone.  The questions can go on and on but you probably get my point.  It's really tough to make sweeping generalizations.  

Although many here on BP will try ;-)