My thought is that "future possible selling price" is also important when buying investment properties.
Possible future gains are from
1) rent income (minus cost)
2) appreciation in value
It is hard to say which one of the above two is more critical than the other, depending on specific market and market conditions at the time of selling.
But, one should consider only to buy if both of these two have potentials to gain, not just one (for example, if only depending on rental income). Correct?
In the example I provided in my question, another investor bought a similar house in 1999 for about $30k, and has been renting to the same tanent for past years. Of course, he has recouped all his investment through rental income. But, he sold it only for $22k this year (he needs the money for his child for college), less than what he paid for in 1999. From his example, holding for long term is another key for such low cost investment properties in areas where there is less chance for appreciation.
The only likely chance for me to make money is through rental income. Even though the return on rental business looks ok. Is it worth the trouble to take this deal?
