When you think of real estate investment, you may wonder whether you should buy a property for appreciation or cash flow. Many people find this decision to be overwhelming. However, before getting deep into the main subject, it is better to address what cash flow and appreciation investing mean. When you consider cash flow properties, you are looking at returns in the range of 10% or more.
On the other hand, when you talk about appreciation, you want the property price to shoot up. Going by this, distressed properties and rehabilitation may not align with your goals. Your focus would be on a neighborhood with expensive houses and lands.
Experts believe that a real estate portfolio has to be diverse to ensure a profit in any situation. However, if you want to choose a niche, investing in a cash flow property can sound impressive. There are reasons for this. Let’s explore them quickly.
Whether it is real estate or any other business, the importance of cash is well-known everywhere. These properties yield money after you pay all the expenses. Hence, if your main objective has been creating cash, you can rely on this process. But you have to choose the right property for this purpose. It can be a slow process, but once it starts creating money, you can expect a steady flow.
Since it can be challenging for a new or inexperienced investor to determine what makes the perfect portfolio, you can attend webinars on this topic to gain some essential insights. If you live in Dallas, you may have heard about DFW real estate investments. Real estate investing groups like them host workshops and online seminars to spread knowledge about these things. You can join one of the networking events for a small fee.
Lower purchase prices
Another thing about this type of investment is the lower costs. Since these tend to be affordable, you may not have to worry about buying and selling them eventually. Besides, when you lease them out, you can get a steady income even during the most volatile economic climate. Even if the rental value slides, it wouldn’t be something massive.
You can use a rental property’s income to clear your mortgage and maintenance amount anytime you get additional cash flow.
From this, it is evident that it can prove to be a profitable investment niche. However, before initiating in this field, you must gather some information. Once you have collected all the required data, you can look for properties that promise excellent cash flow. There are many ways to grab the best deals. For example, you can approach an owner who wants to sell his property due to loss of wage, medical bills, divorce, etc. Bank-owned or pre-foreclosure properties can also be an ideal bet. But other investors will also be there competing for it. So you have to be too smart with your strategy. Another way is you buy properties from wholesalers or those who flip houses for profit booking. However, these can take time to generate cash until you get good tenants.