There is no one-size-fits-all answer. However, Andrew Shader, a successful entrepreneur and real estate investor, has some thoughts on the matter. In this blog post, we’ll try to answer this common question about the two approaches by looking at his insights.
Table of Contents
Before we get into Shader’s insights, let’s quickly review what cash flow and appreciation are in real estate investing. Cash flow refers to the money left over after all expenses are paid. For rental properties, expenses include:
If your goal is to invest for cash flow, you’ll want to find properties that generate positive monthly cash flow.
Appreciation is an increment in the value of a property with time. In the real estate market, this can happen for several reasons, including:
If your goal is to invest for appreciation, you’ll want to find properties in markets that are appreciating rapidly.
Now that we’ve reviewed the basics, let’s look at what Shader says about cash flow vs. appreciation.
According to Shader, the answer to this question depends on your goals as an investor. To help you come to a conclusion, he offers the following three questions as a guide:
Cash flow is likely the better option if you’re looking to get income from your investments. On the other hand, appreciation should be your focus if you want to build wealth over time.
Appreciation will probably make more sense if you’re investing for a long time. However, cash flow is better if you’re looking for immediate income.
If you’re predisposed to take on more risk for the chance of higher rewards, appreciation should be your focus. However, cash flow is probably better if you prefer a steadier return with less volatility.
Answering these questions will position you to better understand what you’re looking for in an investment and whether cash flow or appreciation is more important to you.
Now that you know a little more about each approach, let’s look at some tips to get started.
If you’re interested in investing for cash flow:
When you’re interested in investing for appreciation:
Ultimately, cash flow and appreciation have pros and cons, and your best approach depends on your individual goals.
So is it better to invest in real estate for cash flow or appreciation? As Andrew Shader says, it comes down to your goals as an investor. Cash flow is the better bet if you’re looking for immediate income. However, appreciation should be your focus if you’re looking to build wealth over time.
Andrew Shader is a real estate investor, developer, and entrepreneur based out of Fort Lauderdale. Shader started as an entrepreneur in the insurance industry before discovering his real estate passion: finding scalability in any vertical.
Turmeric, a golden-yellow spice commonly used in Asian cuisine, has garnered significant attention for its…
Islamic dress codes have traditionally centered around conservative, modest garments that align with religious values…
A man's wardrobe is never complete without a suit for it is a type of…
Managing financial transactions effectively is crucial for any business aiming to enhance efficiency and reduce…
Construction erp software news.ticbus.com: In the dynamic realm of construction management, the integration of technology…
In the digital age, where information flows ceaselessly, big data stands as the cornerstone of…
This website uses cookies.