One Rental At A Time Cash Flow vs Appreciation Which is BEST for Real Estate Investors?
Nov 5, 2025
Mike from Rentometer, an expert in rental data analysis, joins the discussion to explore the balance between cash flow and appreciation for real estate investors. He reveals insights on gross rent yield versus appreciation and how leveraging can amplify returns. Zuber emphasizes the importance of cash flow, especially in high-priced markets like Silicon Valley. They also highlight the increasing trend of accidental landlords and the role of technology in managing rentals. Ultimately, while cash flow is crucial, long-term appreciation plays a significant role in building wealth.
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Calculate True Cash-On-Cash Yield
- Include all upfront capital (down payment, closing costs, make-ready) when calculating cash-on-cash return.
- Calculate yearly cash flow after repairs and divide by total cash invested to measure how hard your money is working.
Appreciation Requires Market Betting
- Appreciation markets can produce negative cash-on-cash returns but still be profitable via price growth.
- Betting solely on appreciation requires reliance on one market and carries long-term cycle risk.
Model Appreciation Over Time
- Model modest appreciation (e.g., 2.5%) over multi-year windows to reveal hidden returns from leverage.
- Use realistic down payment and leverage to see how appreciation multiplies returns on your invested cash.