@Josue Vargas sweet deal, that is a lot of rent!! With interest rates as low as they are you actually don't need 1% to see positive cash flow, especially at higher price points tha math still works. And you are right about untapped equity - it's useless and wasted.
But here is the big difference, income is taxed and equity is tax free when you pull it out.
The other consideration is when you start mixing higher price assets into your portfolio then you are creating a tax shelter. The property I just bought provides over $9,000 in tax depreciation over the next 27.5 years. That helps offset income from other properties.
@Patrick M. and you should! Using cash flow to supprt your family life today instead of deferring that to "someday" is a very worthy use! Or to Axel's point reinvest cash flow, so your houses have babies and the portfolio grows without further W2 injections from your heavily taxed paycheck.
My point is to find the right balance between cash flow and equity, and that balance is different for everyone. And you have to consider it in the context of your portfolio, which means the goals change as your portfolio grows. Once you have met your cash flow needs, maybe double, you can re-assess your next goals.
Appreciation is never guranteed, even it looks like it is right now, unexpected things can happen. So you need to have overall strong cash flow, so you can weather a storm, survive on 70% occupancy etc. But you are building equity even without appreciation through your monthly principal pay down, about 3% pa and if you are leveraged 4:1 or 5:1 that's pretty good ROI on your down payment. You can use the equity (tax free income when liquidated) to buy more properties!
When you are able to combine your talent as an investor, your skills as a landlord with the above, great things happen. The loser with the clapboard shack will not run victory laps for very long.
