Ready to diversify your portfolio? Buy and hold real estate is the investment strategy to make that happen. Real estate investing is one of the most prominent ways to grow wealth, but the scope of possibilities can feel daunting. Of all the investment opportunities, buy and hold is among the top.
What is Buy and Hold?
It’s exactly how it sounds. You buy real estate property, and then you hold onto it. Instead of just letting the dust settle, you rent the property out for an extended period. You know you want to sell it down the line, but for now, you’re making quick cash from your renters.
If you’re thinking this sounds a lot like buying rental properties, you’d be right.
What to Look For
When you buy a buy and hold property, you’re either purchasing something that’s relatively move-in ready so that you can start renting ASAP or something that’s incredibly cheap but in a good area for renting potential once it’s fixed up. You’ll need to consider the time and energy you want to put into your property before it’s ready for renting.
The Benefits
Buy and hold properties fare better than quick turnarounds in a volatile market. Plus, the longer you have your property and pay on it, the more it should grow in value. Appreciation is one of the main reasons investors pursue buy and hold. There’s also the short-term rental income and consistent cash flow.
Financing the Purchase
There’s a lot of options here. From going the traditional route of a bank to the less-traveled path of private lending, it’s all on the table. Traditional funding means credit checks, application processes, and tough approval, but that’s what brokers are there for, anyway. Or go a different path and get creative in your financial journey.
When to Sell
You’ll want to create a game plan before you make the first purchase. How many years do you want to hold on to this property? What do the market trends look like? How much principal do you want paid down first? It’s a good idea to talk to professionals so you can determine when the best time to buy and sell will be.
What You Need to Know
Prepare for the unexpected with buy and hold real estate. From market fluctuations and bad tenants to pandemics and maintenance, it’s always an exciting time. The payout could be huge if you’re ready to commit. And when you’re ready to sell, talk to a real estate professional to get the most bang for your buck.