If its all about cash flow then does this make sense?

[lilbuffet]

My business partner and I have been discussing this topic for quite some time. We currently live in Alberta, but are from Nova Scotia. We also recently graduated university so we aren't technically "cash rich" but we do have funds to invest into a property up to the low 300's.



The only question is, when taking into consideration properties just from a cash flow perspective we find it easier to find these properties in parts of Nova Scotia, places like Sydney. For example, we can find a triplex for 249K which cash-flows 300 dollars after taking into consideration the vacancy, property management, and repairs allowance.



It would extremely hard to find a similar property in Alberta, but obviously the macroeconomic factors are much greater here in terms of long term appreciation, but if its all about cash flow why aren't other investors considering the east coast?

 

[DaveL]

I have two properties I have bought over the last 12 months in Edmonton in the low 300's and they cashflow around $500 each. Are you guys just looking on MLS or are you having a realtor source properties for you?

 

[Thomas Beyer]

It is NOT mainly about cash-flow. Is is MAINLY about equity creation through mortgage pay down and value appreciation. But, to get that you have to hold 5 or better 10+ years and to get there you need cash-flow. Real estate is like a 3 course meal: the cash-flow is the appetizer, the main course is the mortgage pay down and the dessert is the equity appreciation.

 

[invst4profit]

It is absolutely essential that novice investors have positive cash flow to start out especially in the case of having small cash reserves.

The biggest mistake new investors make is overestimating there positive cash flow. They often base it on short term ownership with insufficient long term cost calculations which usually results in small to negative cash flow.



Depending on the building actual long term costs can range anywhere from a unusually low 30% to over 60% of your monthly rental income. Add on top of that dept repayment and negative cash flow results.



It is very common for those investors interested in only owning one or two rentals to, without knowing it, have no profits until they sell as a result of major repairs combined with vacancies and general long term maintenance.

 

[Alvaro Sanchez]

The way I see real estate investing is about making money at the start (buy under market), during (cash-flow) and the end (mortgage pay down + appreciation + selling at market or better).... Yet, my focus is to buy and hold. If you're planning on flipping in 3-5 years, appreciation might be more relevant for you.

 

[housingrental]

I second Greg's post above