these are excellent questions that everyone needs to resolve for themselves
I set out to build a real estate empire and got way-laid by a real estate bubble – I got sucked into the bubble briefly but then realized I was speculating in real estate and NOT investing [there is a huge difference – an investment (typically) sends you a check every month – if you are writing a regular check to support your real estate ‘investment’, you might ponder the difference between investing and speculating]
for investing, I like to think in terms of secular trends (10-15 years) – IMO a person only needs to make three or four good investment decisions in their lifetime, if:
1. they are investing in secular trends, and
2. they ride the trend until it ends
back in 2002 when I became aware of the building RE bubble and was deciding what to do about it, I identified these secular trends:
– stocks: 1999/2000 through 2015/20 – down [remember the Dow was heading down until 9/11 conveniently provided a reason to pump lots of money into military spending, homeland security, etc – basically the WPA and CCC with a modern day twist]
– real estate: 2002 through 2015/20 – down, and down hard [yes, I have been expecting RE to die a painful death since 2002 – it amazes me that we have made it this far without a serious crash – of course, if I had $23.7 trillion of the taxpayer’s money I could fake a pretty good recovery too]
– precious metals: 1999/2000 through 2015/20 – up, and up dramatically
based on these trends I started selling my real estate and investing in the precious metals
this strategy is working pretty well for me so far – out of real estate by 2006 and into metals – I bought silver around $5/oz and gold around $475/oz (and encouraged everyone on this site to do likewise!!! they are at $16/oz and $1118/oz today) – I’ll hold my gold coin and the three silver ones until 2014/15 or so and then see what secular trends are doing at the time – I expect I will be switching out of the metals and back into real estate or perhaps equities
I believe my original intent of building a real estate empire is along the lines of what you are saying – ie, long-term investments that throw off cash
when the bubble occurred I decided that the short-term capital gains I had in hand were more valuable than the POSSIBILITY of long-term cash flow and appreciation – this decision was made easier by the fact that most of my properties were cash flow negative at the time – and yes, I have had second thoughts about selling all my rentals
