Why Appreciation Outweighs Cashflow: Lessons from 19 Years and Hundreds of Rental Properties

Appreciation beats cashflow...

...I don't know too many people that have owned more rental properties than me.

Maybe some syndicators that were fractional owners...

But  I don't have partners...anymore.

In my 19 years of owning hundreds and hundreds of rental properties...there is one lesson I've learned the hard way

APPRECIATION BEATS CASHFLOW

I'm speaking about the single family home world.

I know what many people reading this are saying...

"Matt you're wrong"

"Matt didn't you read Rich Dad Poor Dad?"

"Matt you've lost it"

"Matt you don't know what you're talking about"

People hype up cashflow on single family homes...

...in my experience--2 things are TRUE

1. It's not passive

2. It's not consistent

Pro-forma's are liars.

It's rare a pro-forma comes true...

Unexpected expenses always come up.

The costs to "turnover" a property after the tenant moves out can't be covered by the security deposit in most cases ANY LONGER

Maintenance costs are 3-4x what it was just a few years ago.

Tenants (millennials in many cases) don't know how to do a single thing and will call for maintenance constantly...racking up maint costs and lowering monthly cash flow.

Insurance costs have doubled...unexpectedly...further lowering cash flow (or lack of)

Now..I'n not saying to buy houses that don't cash flow...

Cash flow should be goal number 2 when buying a rental property...

What's goal number 1?

Appreciation

Will this property appreciate more than likely as I own it?

Does the area support appreciation?

Does the house type support appreciation?

If not, find a different house and wholesale that one to someone else.

Looking back after 19 years and owning hundreds of rentals...the houses I did best on APPRECIATED THE MOST

"Yeah but Matt the houses I am finding that will appreciate the most won't cashflow"

Then don't buy it...wholesale it

Keep looking until you find LIKELY appreciation AND cashflow and those are the ones to ADD TO YOUR PORTFOLIO

You can't count on APPRECIATION...

...but you also can't count on CASHFLOW

Nothing is guaranteed INCLUDING CASHFLOW

And when cash flow disappears...EQUITY IS THE ONLY THING THAT SAVES YOU

 My cold callers combined with the best data out there...can help you get all 3.