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Cash flow vs appreciation

Growler

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Mar 21, 2017
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Hi all,

I am a complete newbie here. Just read "the book" this past weekend and wrote my personal Belize yesterday. Still a bit lost, but trying to figure things out.

I'm looking for some insight into what experienced investors assign more value to when analyzing a property...... higher cash flow or potential future appreciation.

As an example, I've been looking (by looking, I mean on Realtor.ca) at some properties in Sarnia, ON and many seem to have excellent cash flow potential, when using the quick screening formula. I also have come to realize that Sarnia does not hit on many of the key driving factors for appreciation or a "boom" (I could be way off on this analysis).

Are higher cash flowing properties (with less upside appreciation) still a viable option to create long-term wealth, or am I being completely shortsighted here? Sarnia seems to have some really affordable properties that keep drawing me back to that region.....perhaps because I don't have much cash to get started with.

Any insight would be greatly appreciated!!

This is my first post..... I should probably celebrate this first step in my journey right?
 

Thomas Beyer

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Aug 30, 2007
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Some thoughts on this topic here with a fictitious $1M.

Real estate is like a three course meal (TM). It has three profit centers: cash-flow (or the appetizer), mortgage paydown (the main course) and equity appreciation through asset improvements and inflationary rental upside (the dessert).

What is better: Cash-Flow or Maximum ROI ? http://myreinspace.com/threads/what-is-better-cash-flow-or-higher-roi.26596/
Cash-flow does NOT make you rich, but it allows a sustained ownership. Appreciation and mortgage paydown (by others) is where you get wealthy. [btw: A market with no upside - especially as a young person - ought to be avoided in my opinion. Others may differ in their worldview. ]
 
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Growler

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Thanks Thomas,
Interesting thread. I see what you're saying. I guess the thought of cash flow is appealing, but in the end, short sighted if I want to achieve above-average results!
 
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