For the uneducated the chart you put together looks really exciting, but we all know appreciation really doesn’t work that way. But let’s for a minute agree to disagree that’s the normal progression of appreciation. Chances are the property in question is returning a negative cash flow, market factors can also play a role on that appreciation, political or like New York real estate witnessed devaluation during the peak of the pandemic with people leaving the cities. There are associated expenses that also impact holding properties for appreciation. My opinion is that those that chase appreciation are not investor but speculators. Because I think 🤔 they’re willing to sacrifice steady income for a payday.
It’s convenient to think the cash flowing property doesn’t appreciate, but we know they do appreciate, not the way a speculator might want. Capital pay down is also glossed over. And like David Greene wrote about brrrr. I think the brrrr method is easier with cash flowing properties
Here’s my take, without knowing the investors situation and strategy, we can fall into the trap of trying to recommend what worked for us as an investor rather than look at each situation as been different and unique.
For an experienced investor that has more than enough capital to cover negative cash flow, capital appreciation might be something they want, for a newbie you will agree that capital appreciation is the last thing on their mind especially when they’re looking for financial freedom through “passive income” what better way to get excited but to get your first check.
We do know that very few investor will start their investing career without the security of cash flow. If I am bold to say, you included. Cash flow acts as a Safty net, that’s why majority of investors focus on cash flowing assets, everyday experienced investors are looking for best cash flowing assets, self storage, mobile park, Tripple net leases to name a few. I know it will be difficult to pitch a syndication deal that offers no cash flow.
I happen to be a firm believer of Robert kiyosaki assertion “what takes money out of your pocket is a liability” there was a jujitsu analogy that David Greene used in one of the bigger pockets podcasts “a fighter will out of boredom do a back flip when he is winning a fight and that’s when he might get caught with a haymaker” am sure that’s not quite how he phrased it. But investing is supposed to be boring and predictable and when we get comfortable albeit cocky we suddenly believe that focusing on what got us to the dance 💃 no longer suits us. That’s when we do back flips to excit ourselves and invest in negative appreciation properties. We forget that as a newbie you might not qualify for a mortgage to buy these appreciation properties.
My opinion and I stand to be corrected is why sacrifice one for the other when you can achieve both. Except you’re investing in a war zone where appreciation is minimal, there’s no reason you asset will not appreciate.
My name is Obia or Obi of the Obi 1kenobi fame and I am a recovering ❤️🩹 fix and flip addict. I love Detroit
