Don't Bank On Appreciation

Real estate does not always go up in value. Homes usually go up in value, but if you count on "usually," then you're speculating, not investing.

If you're a flipper, flip based on today's prices. If you're a long-term rental investor, buy based on today's cash flow. While home values can collapse, rents remain surprisingly resilient. Even in the Great Recession, when home values dropped by 27–42%, rents continued to rise, according to the U.S. Census Bureau.

That's the beauty of rental investing. When you learn how to forecast cash flow, you can calculate the returns on any investment property accurately, and you can opt to invest only in high yield properties. And when you invest in rental properties based on current cash flow, then any appreciation is gravy.