High end properties are harder to cash flow but are a much better speculative play because their values rise the most, sometimes astronomically, in an up market.I try to find blue collar properties in the middle that I can purchase at a big discount to gain instant equity, cash flow pretty well, and might even have a chance to appreciate tremendously in a market upswing.My opinion is why risk your money on an upperclass rental that has the extreme possibility of negative cash flow, especially if you're just beginning your investing career?

@James Mudd3.5% down for 30 year term (I will pay off much sooner of course)If your rate isn't astronomical, what's your reason for paying it off sooner?

On the other hand, it is frustrating to be renting and see the astronomic appreciation that has occurred here over the past year.

That just sounds astronomically disproportionate.Anyone else have a nice deal killed by prop taxes?

I see you are located in Santa Cruz, which is one of many beautiful pocket markets here in CA, where you have astronomical real estate prices along the ocean and lots of opportunities in the "sea shanty villages" more inland.

Others are more into cap rate like any big multifamily or commercial, but if I do this and come with the final offer price based on just the side rented income, the difference between asking price and offer is astronomical.

This was before the housing bust and the prices were astronomical.

personally.. between property taxs and foundation issues this is a tough market... again just personal opinion based on my expiernce owning property there and paying those astronomical tax bills and having to do foundation work on every single property I ever bought.. that alone wipes out 2 to 5 years of cash flow.

Also, their grocery bill is astronomical and it should be cut drastically while still eating healthy food. 

The asking price is astronomical and they believe that it will underwrite and appraise for that because of cap rate, income, etc.