When investing in real estate, you have to decide whether you're in it for cash flow or capital gains.  Well, what is difference between cash flow and a capital gain? Cash flow is difference between your income and expenses.  For example, if your income  from a rental property is $1500 and your expenses (mortgage and operation) total to $800, then you're cash flow is $700 per month.  A capital gain on the other hand, is the profit/gain you receive after buying and then selling the property.  For example, if you buy a property for 100,000 put a little work into it and then turn around sell and it for $175, 000 you're gain is $75,000.  Both strategies, have there benefits and drawbacks! Deciding, which strategy is best for you depends on your plan.  The question is, what is your plan?