Cash flow is your net operating income you get every month. It is the income that is left after expenses. Appreciation is when the value of the property increases over time. Maybe you bought it for 12 million, and you fully financed it out three years later at 16 or 17 million because the value went up in that time. That’s appreciation.
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What are your investing goals and your risk tolerance? Goal, risk tolerance and patience all go together in deciding between cash flow or appreciation. It’s a really important question to ask before investing because there are certain types of properties you are investing in for one or the other. And every now and then you get the sweet spot of getting both.
We ourselves prefer cash flow. It's less risky because you are not trying to time the market to figure out the best time you can buy low and then time it again for when to sell for the most you can get. Cash flow investors aren't taking the same risk because whether the market is up or down, we don't care as much because cash flow or rent is coming in all of the time. In multifamily, there's even less risk due to forced appreciation, where the appreciation is forced by increasing the income or decreasing the expenses.
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