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Appreciation

Appreciation
The market value of your house/property/investment. Appreciation increases or decreases over time depending on factors of the area the property is in such as the number of properties being built, the population of the area (increasing or decreasing), available jobs in the area, etc.

The amount you earn when you sell an asset depends on the purchase and sell price. For example, if you bought a house at retail for $50,000 and sold it for $100,000 8 years later, your house appreciated by $50,000.

Pros
Happens automatically without any effort required

Cons
Not guaranteed as the property may not appreciate

Supporters

No votes have been made, be the first!

100%

Cash Flow

Cash Flow
The monthly income from rental tenants in your investment property. This is the amount of cash you receive after all expenses (taxes, mortgage, interest, repairs, vacancy, etc). If your property rents for $1,000 and you have $900 in expenses each month, your cash flow is $100. This can be a positive number or a negative number thus creating negative or positive cash flow.

A good investment will be positive and a good investor will run all of the numbers using all expenses (not just the convenient ones) to determine if a property is worth buying.

Pros
Monthly income (if positive)

Cons
Requires work and effort (IE: tenants)

Supporters

FindingJay

Appreciation is a secondary benefit

Properties should be bought for monthly cash flow and if they appreciate, great! If you buy a house for appreciation only, you may find yourself in a negative cash flow situation where you spend more monthly (total) than you earn when you sell it in the future.
Posted by FindingJay on 11-11-2015
Lop

It may not appreciate

If you buy an investment for cash flow, you don't have to worry whether or not it appreciates over time. As long as you run the numbers correctly and have positive cash flow, you can hold the property for as long as you want. Good times and bad. You can choose when to sell.
Posted by Lop on 11-11-2015
neilbhabuta

Cash flow

To Wait for the time when the property would appreciate is not something that many people would like to go for. Particularly, when there are a lot of other issues that can be solved with the ready cash flow, waiting for appreciating of a product or a property is not advised.
Posted by neilbhabuta on 08-18-2016
Heatman

Slow and steady is better

Time is everything with investment property, and I think that as much as the money that comes from allowing your property to appreciate over the years and sell it for a bulk sum of money look like a good deal, I believe that the money coming slowly and steady from Cash Flow in one's house would eventually be higher than what you realized in selling after appreciation of the property.

It's the ability to save that is the major problem which comes with Cash Flow on investments, this is because if you can save because you lack a good saving culture or habit, at the long run such property would look worn out and you really haven't generated as much funds you should have from renting out such building.

Posted by Heatman on 09-25-2017

Comments

MasterA
I didn’t vote in this one because there is no conflict between the two. You can generate monthly cash flows by renting out your house and then sell your property when the value of it appreciates. The disadvantage with appreciation is that the value may not increase but this is why renting your property out is useful because you will wait for it to increase and if it doesn’t increase, then you can just keep renting it out for a monthly fixed cash flow. If you are a clever investor, then you should buy houses from less developed places that are due development and once development starts, the house prices will rise a lot which will earn you a lot of money.

I do understand that not everyone has the same thoughts. For example, some people may prefer renting for monthly income instead of flipping it because there is too much hassle with constant property flipping and that is absolutely fine but I think using both at the right times will give you the highest profits.
Posted by MasterA on 06-23-2016
FindingJay
Some gurus teach buying for cash flow while others teach buying for appreciation. They may not always be interchangeable. For example, for appreciation you probably want to buy in a large city or somewhere that is expanding with job opportunities. The rent you receive may not cover the monthly mortgage costs (assuming you finance it).

Vice versa, you may buy a house that creates a positive cash flow but doesn't appreciate for 20 years.

Given you have to decide which factor you want to buy for, which one would you purchase a rental unit for? This isn't saying you can't combine both and have both, this is asking which goal you would choose when purchasing an investment property.
Posted by FindingJay on 06-23-2016
overcast
I think real estate market is one of the under appreciated one in my opinion. And here the cash flow comes and goes in many ways. You can see that some of the time you find cash flow is easy to manage if the market is good. But there are times when the renting and other factors come into play. I'd say positive cash flow is harder to maintain. And one has to understand that those with the recurring revenue.
Posted by overcast on 06-25-2017
Corzhens
Our plan for retirement is to build an apartment or buy one that is still okay for renting out. The priority would be the cash that will be coming in from the rental since it is understandable that a retired person has no means of income anymore. And having the money in real estate is a good investment here because it always appreciates in value especially if the house is located near the main road which has the alternative to turn it into a commercial rental.
Posted by Corzhens on 01-25-2018
lovely
I will prefer cash flow, no need just having a thing that money might just come in from outrightly selling it.I need a cash cow no matter how small the cash flow is,it still better because, it passive income.Building a place and renting or leasing it out is better because one will be getting steady cash than just selling the building outrightly because it has appreciated in value.
Posted by lovely on 02-22-2018