I am going to take a slightly different approach to your questions.
If your rental property is generating a sufficient cash flow now, it should continue to do so in the future. If you should see a decline in housing prices in your market, you should not automatically expect a decline in rental rates. In my experience in a rapidly appreciating market, housing prices rise a lot faster than rents. When housing prices decline, rental rates stabilize or stagnate for awhile, but do not drop precipitiously.
For example, I bought a townhouse in 1999 for $49K and rented it for $650 per month. Today, comparable sales prices put the market value of my townhouse at $160K but in those same five years my rent has only increased to $875 per month. Let’s say that next year the value of my rental townhouse drops 30% from $160K to $112K. My rent will not go down, it just will not go up that year. My point is that if the property was generating a positive cash flow when you purchased, your fixed overhead won’t change just because you see a little decline in the property’s appreciation.
The rent the market will bear is not as closely tied the the value of the property as it is to the cost of homeownership for the same property. In my example, the cost of owning my townhouse at $160K is about $1200 per month. I think I have an adequate rental pool with rent at $875 per month. Even if housing prices for the same property drop to $112K and the cost of ownership drops to $900 per month, with my rent slightly below the cost of homeownership, I still have an adequate rental pool. I don’t have to drop rents to get a qualified tenant, though I will likely have fewer applicants for the same property.
If you were brand new to the landlording business, then Jeff Adams’ caution about not getting “caught up in the rental game” might bear noting with some concern. However, you are not new to the landlord business with some rental properties already in your portfolio. If your properties are generating a positive income, don’t abandon them to concentrate on property flipping.
Quick cash deals can be attractive because of the large paydays, but the money does run out. To get another payday, you have to do another deal. What happens when you want to slow down or “retire” but you can’t because your expenses don’t slow down or retire. You always need to do another deal to get another payday. Only by building a portfolio of income producing assets, will you be able to slow down or “retire”. If you hold the property long enough, your tenants will have bought it for you, and your free and clear property(ies) will continue to generate a monthly income to meet your lifestyle needs even if you never do another deal.
Don’t get me wrong. Quick cash returns are great when you need to build working capital. But, if you wisely invest some of your working capital into your rental property portfolio along the way, you will one day discover that you have amassed considerable wealth.