So how come those investors still invest Southern California? Because they belong to a certain type of investors: The Appreciation Investor. This type of investor is someone who is not looking to make money on the short run, but rather, expects the property’s value to SIGNIFICANTLY increase over time. These are speculative investors, because let’s face it – nobody has a crystal ball. Yet if investors know the market well, how it behaved in the last recession and have a strong belief that it will improve significantly, they invest in this market. They are not looking for immediate returns. Amon those investors you will find foreign investors, who need to park their money somewhere, and any alternative is better than what they have right now in their hometown. Another type are REITs and large real state companies.
The second type of investor is The Cash Flow Investor. This investor is more conservative than the Appreciation Investor and look for short term returns. This investor doesn’t put a large emphasis on the future appreciation of the property, and will never invest in a property that does not produce positive cash flow (money left after all expenses and debt have been paid). Some Cash Flow Investors are willing to accept no or little cash flow during a rehab period if they invest in a value add deal – because they expect to get a much higher cash flow once the rehab period is over.
As for me? I am a classic Cash Flow Investor. When I look at a deal, I always assume that when I plan to exit (in 5-7 years from the purchase date), the market is not strong and that real estate prices are falling. If the property is not cash flowing from day 1 – I pass on the opportunity.
There is no right or wrong here. It’s a matter of personal preference, appetite for risk and investing philosophy. What type of investor are you?
About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.