Short answer – because focusing on appreciation is easy. Investing for cash flow requires you to do some work.
The average amateur investor is lazy. And you should be thankful for that, because it means less serious competition!
The typical amateur investor focuses on appreciation for the same reason they buy lottery tickets. They want a windfall that doesn’t require work. They just want to make a bet and hope it works out for them.
Investing for appreciation requires only that you see someone else in your neighborhood cashing in on a house they bought a long time ago, and then you buy a house hoping, praying and wishing that you can get the same effortless, free money.
Investing for cash flow requires you to understand financial analysis. Now, real estate financial analysis is not rocket science. But it does require some effort to learn, and it also requires experience to understand operating costs in your market. (I teach basic financial analysis and provide an easy to use model in my multifamily real estate investing course.) It requires mental energy to invest for cash flow, and it also requires discipline.
The typical amateur investor hates discipline. They just want to make a bet and collect easy money.
And they often get burned, because they are drawn into the market at the top, after they have been watching other investors cash out for several years and finally can’t bear missing out any longer.
I’ve actually seen people buy at the top of the market, take on a property whose rents don’t cover expenses, and pay out of pocket to carry a property because they “know” they will make money when they sell.
If they understood how to invest for cash flow, they would never make this mistake, and they would save themselves thousands of dollars and make way more money in the long run.