Does It Have to Cash Flow...Or Am I Buying Appreciation?

I’ve been wrestling with something lately that I know a lot of you are quietly wrestling with too.

Do I buy a property that loses $300-$500 a month today...if I am highly confident it will be worth dramatically more in 3-5 years?

Not hope confident. Not “rates will drop” confident.

I’m talking about buying in a historically strong neighborhood that is temporarily down, forcing equity through a BRRRR, and knowing...based on long-term fundamentals...that the value will likely be much higher down the road.

The problem?

It doesn’t cash flow right now.

And that is where the slope begins.

One negative property feels strategic. Two feels manageable. Five feels like a portfolio shift.

Then one day you wake up with a portfolio bleeding $3,000-$5,000 a month and you’re telling yourself, “It’ll be fine long term.”

That mentality has bankrupted investors.

Not because appreciation didn’t happen.

Because liquidity failed first.

You don’t go broke because your property will be worth double in seven years.

You go broke because you can’t float it for 18 months.

The Portfolio Lens (Not the Single Asset Lens)

One thing that has helped me think more clearly about this is shifting the question.

Not: “Does this property cash flow?”

But: “What does this do to my portfolio?”

Let’s say I buy a single family that loses $300 a month. But I also own a duplex that makes $700 a month.

Portfolio = +$400.

On paper, that works.

Single family portfolios give you flexibility that large multifamily simply doesn’t. If you own 100 SFRs and something shifts, you can sell 5, 10, or 20 of them individually. If you own a 100-unit apartment complex, you can’t sell 17 units to fix a problem. It’s all or nothing.

That flexibility matters.

But here’s the danger.

Once you start justifying negative properties because “the portfolio can handle it,” you can slowly tilt the entire portfolio toward appreciation bets without realizing it.

That’s where discipline matters.

Forced Equity vs. Hope Equity

There is a massive difference between forced equity and hope equity.

Forced equity:

Hope equity:

I will tolerate some short-term negative cash flow if I have real, provable forced equity today.

I will not tolerate negative cash flow based purely on a macro thesis.

That’s speculation dressed up as strategy.

What I’m Actually Doing Right Now

Here’s where I’ve landed.

I am still pursuing BRRRRs that cash flow as much as possible. Cash flow matters. Period.

But I am also selectively buying in A neighborhoods where I know my future self would HATE that I sold the property.

That’s become a real filter for me.

If I can picture myself in seven years saying, “Why on earth did I let that one go?”

Then I need to seriously consider keeping it.

However:

Appreciation is not cash in the bank.

The 24–48 Month Plan

This is not “buy and pray.”

It’s structured.

In other words:

Use appreciation markets to build equity.
Use that equity to build durable cash flow.

I like appreciation markets as a house flipper.
But I want long-term cash flow as an investor.

And in order to get the better long-term cash-flowing properties, sometimes I need to manufacture capital first.

That’s the bridge.

Creative Cash Flow (With Caution)

There are other levers:

These can absolutely improve numbers.

But let’s be honest.

This is not passive cash flow.
This is an operating business layered on top of real estate.

It can work.

But you better know what you’re getting into.

The Rule I’m Using

Here’s the line I’m trying to hold.

Because the moment you rely on appreciation to survive...

You are exposed.

Real estate is math.

Math first.
Narrative second.

When I’m underwriting one of these, I ask myself two things:

Am I buying this because it’s strategically brilliant...or because I’m afraid to miss upside?

And if this property never appreciates...

Can I still survive owning it?

That answer tells you everything.

- Tarl Yarber

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If the numbers make sense, we move fast.

Help Give Back - America’s Mighty Warriors

Since 2018, one of my events company’s main purposes is to help raise money for charities we believe in. Since 2022, we have been supporting Debbie Lee and her charity “America’s Mighty Warriors” in honor of her fallen son, Marc Lee.

Join Debbie March 21st in Scottsdale AZ in celebration of the life and legacy of Navy SEAL Marc Lee and raise funds to continue his mission saving his teammates.

This event will be an awesome experience. Even if you cannot attend, please consider giving.

Check it out here!