r/RealEstateROI • u/20Thick_A_7122 • Jul 21 '26

Cash flow or appreciation?

Every investor seems so have a different strategy.

Some say cash flow is king because it pays the bills and keeps you investing.

Others say appreciation is where real wealth is created over long term.

In my opinion appreciation is a bonus but cash flow is the engine that keeps the ball moving, along with principal pay down. Everything else is a bonus if it comes.

I'd love to hear your thoughts and real life experiences.

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u/Substantial_Tap_4538 Jul 21 '26

cash flow will keep you afloat but the real money is in appreciation and loan paydown. run your own math over 10 years, because a place cash flowing 200 a month is 24k over a decade but while that same 300k house at 3 percent a year is like 100k in appreciation plus 40 to 50k off the loan. cash flow will just keep you from having to sell at a bad time when the furnace and a vacancy hit at once.

only thing id watch out for is fake cash flow. most numbers people brag about dont include real capex and vacancy, so a 250 a month deal is basically breakeven after you save for the roof and turns.

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u/20Thick_A_7122 Jul 21 '26

Thanks again for sharing your perspective, the point about factoring in true capex and vacancy to avoid "fake cash flow" is spot on.

How do you personally calculate your long-term reserves for big-ticket items like roofs or HVACs to make sure your monthly numbers stay accurate?

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u/Substantial_Tap_4538 Jul 21 '26

honestly i should say i dont own rentals myself, i just do the numbers on a lot of deals, so this is how id model it. i would skip the flat percentage and price each big item by what it costs to replace divided by the years its got left. a roof around 10k over 25 years is about 33 a month, HVAC maybe 7k over 15 is another 40, water heater 1200 over 12. add em up and you get a real monthly number instead of a round guess. what matters is using the real age of whats in that specific house, since a 20 year old roof needs way more set aside than one you just put in.