Buy & Hold Rentals - Rent X vs Capital Appreciation

[Sammy Paul]

I am relatively new to real estate investing. I just bought my first property. I have a back ground in banking so I've been involved in rentals/construction/development for a while, but this is the first time I've put my money in.

Since my purchase, I've been turned onto this site. I would say that I'm more risk adverse than most on here and cash flow is more important than ROI or any other factor so I bought my first house with cash.

I was able to purchase my first house and get it rehabbed for 2.8x gross rents. Now that it is cash flowing nicely, I'm considering adding another property to my portfolio using leverage.

I was very happy with the gross rent multiplier I was able to get my first house, however, I do not believe I will be able to get much capital appreciation from the property - I do not plan to sell and I think I will be able to get out for what I have in it, but I don't think I would be able to get much more than that.

Here's my question. For you buy and hold guys that have been doing this for a while: Which is more important to you? Gross Rent Multiplier of Purchase Price OR Potential Capital Gains?

Thanks in advance.

[Sharad M.]

Hi Sammy,

Welcome to BP! You have found yourself the best RE networking website.

For me personally, Cash Flow is more important, any appreciation will just be bonus for me, but there are some very successful investors on this website who are doing great with Capital Gains strategy. Mitch is one that comes to my mind. Hopefully, he will be able to provide some insight.

But I think as long as you look for bargain deals, you should have some capital gains in the future, nowhere close to what investors like Mitch might have, but you should still have some. What's the time period you are thinking of for the capital gains? If it's 2-5 years, you probably won't see any, but if it's more than 5 years, then there's a good chance that you will see some appreciation.