Cashflow and Appreciation

[NoMoneyDown]

The ultimate victory for a real estate investor is to acquire a property that both cashflows AND is in an area where appreciation should occur (whether it be quickly or steadily over time). However, for those that invest in real estate, would you still buy a property that cashflowed out-of-the-box, but had a history (and future) of not appreciating very much (if at all)?

The reason I ask is that I found a 4-plex that will cashflow the day I buy it, but the region has not been good for appreciation nor does it look like it will (at least in the near future). I can get it without almost no money out of my pocket (80% bank loan + 20% seller carry - I'll just have to pay closing costs and inspection). My calculations show it to CF $350/mo on the low end and probably more like $450-$500/mo.

 

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[NerdSmasher]

Well, I'm no expert... but it looks to me like all you have to do is sign a few papers, make a few calls, and you'll have $350+ per month, without investing any money at all. That, my friend, is infinite ROI. However, I can see where you would worry, if you ever wanted to get rid of the property; but you could always do a few little things to make it look better if you're trying to sell later on.
And, who knows, maybe this will be the year that the market in that area decides to go up! If not, so long as you can keep the house cashflowing, I don't see what the problem really would be... It's just free money!

 

[kurtyordy]

For me cashflow is always king. If it is cashflowing, you can afford to sit on it for 100 years. I imagine that after 100 years there will be some appreciation. OF course the holy grail is to have both.

 

[SteveO]

You can never argue with cashflow for nothing down. These deals are very rare though. You may want to double/triple check your calculations. You could probably get some input here if you post some of the numbers.

I am a strong believer in buying undervalued properties that can be increased in short order. There is a lot more money in that process.

Your deal would add a lot of experience to the overall understanding of the market. There are always a ton of learning experiences that come with any transaction. If multifamily is the route you want to take, a low risk deal is a great way to start learning.

Keep in mind that people rarely purchase a property and find that the cashflow is higher than they calculated. You need to do your due diligence to insure you will be positive.

 

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[NoMoneyDown]

Thanks everyone. My thinking was to go forward, too, but just wanted some feedback. I'll post my spreadsheet with numbers when I can.