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What is a Buy & Hold?

A long-term investment strategy in which an investor purchases a property and holds it for an extended period of time is known as buy and hold real estate. The owner usually plans to sell it later, but will rent it out in the meanwhile to aid with buy-and-hold real estate finance.


Due to the promise of long-term gains and short-term cash flow, the purchase and hold real estate strategy is one of the most popular investment strategies. The property's rental revenue provides short-term income that can be utilized to pay off the mortgage and put money in the investor's pocket. The value of the property will increase over time, allowing an investor to profit when the time comes to sell the home.

Buy & Hold Real Estate Investing in 5 easy steps


Find the right property- You need to get the finest bargain available whether you're trying to buy a property for rental or refurbishment. When it comes to rehab homes, there is a greater emphasis on making offers that will boost your profit margin. A buy-and-hold property should be treated similarly. Your monthly cash flow is determined by your housing expenses, which are then calculated using the purchase price. You should negotiate for a rehab the same way you would for a rental home. While the price is always significant, getting the correct property is much more vital. Not every home is suitable for rental purposes. You can get a wonderful deal on the price, but if there is little demand, you will have a difficult time finding tenants. 


Finance the property- One of the most common misconceptions about buy and hold finance is that you can't fund your acquisitions using hard or private money. All of the same financing options are available with buy and hold properties, but they are structured slightly differently after a few months. Any of the following buy and hold real estate financing options are still available to you:


-Traditional Lender Financing

-FHA Purchase Loans

-Hard Money

-Private Money

-Seller Financing

-Partners

Upgrade the property- In some ways, rehabs and buy-and-hold properties are similar in that they both require value addition. There are a limited number of good turnkey rental property packages available. These types of houses frequently sell for close to the entire asking price. You must be willing and able to put in some effort if you want a successful buy and hold transaction.

Manage the property- One of the reasons investors avoid buy-and-hold properties is the horror stories they've heard about tenants. However, nine out of ten tenants are usually excellent. That last one has the potential to transform a decent property into a nightmare. Working with a property management is the best way to avoid this.

Prepare for the unexpected- A rental property's situation can easily change at a moment's notice. You're thanking your tenants for making timely payments one day, and then the furnace goes down the next. It's very uncommon to go several months without experiencing any problems, only to be smacked with two or three huge bills out of nowhere. It's critical to keep a solid reserve fund on hand to prepare for the unexpected. You will be forced to scurry to acquire monies to pay for these products if you don't have any reserves. This money could come from high-interest credit cards, personal cash, or monies set aside for other purposes. It can also lead to you running the property in a way that causes you to lose good tenants and, in the long run, costs you more money.

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