Originally posted by @Frank Wong:
Hi Andres,
You want quality vs quantity for sure. Quality will have better tenants, fall in a better area, and will be more stable. Now quality will not necessarily mean a higher cash on cash. Usually, it is the opposite. A better property will have less cash flow because of the higher cost of acquisition. The goal is to find the sweet spot where you can maximize cash flow with quality. For each investor, the sweet spot is different based on how they view what quality is.
Lots of investors goal is to get as many doors as possible. For example, they want 30 doors netting $200 a piece. I rather have a fewer amount say 8 doors with zero loan balances which will net me the same amount as 30 doors maxed out on LTV. For me it's about time. I don't want to deal with 30 doors netting me $200 each. Yes, I get the argument that I don't have 30 houses leveraged for appreciation. On the flip side I also don't have the risk of 30 houses leveraged should the market go against me.
Couldn't agree more. Unless the property was acquired at a really good price in downturn market, in order to obtain a higher cash flow property right now means it will be less appreciating and not the best neighborhoods. Zero or lower cash flow would be the opposite and better neighborhoods but bigger payoff with appreciation.
If you do opt for higher cash flow properties and aim for more doors in coming years, time and energy spent will be higher obtaining and maintaining than with less doors but less cash flow but better appreciation.
Best strategy would be a balance of both. Good luck.
