How to Buy and Hold Real Estate


A buy-and-hold real estate strategy is considered one of the safest and most lucrative ways to invest in property. Unlike flipping properties for quick cash, this long-term approach to purchasing real estate yields both short-term rental income and appreciation of property value over the years.

It’s important to understand how buy-and-hold properties work before you invest in this investment type. As a landlord, you’re responsible for the marketing of your property, tenant screening, rent collection and maintenance on your own or with the help of a property management company. If you’re not prepared for the scope of these tasks, you may find this real estate investing method is not a good fit for your lifestyle and investing style. Read more

Choosing the right location is essential for buy-and-hold real estate investments. The goal is to buy property in a location that’s attracting and retaining tenants, which means the area’s housing market is steadily rising. You can determine whether an area is growing by looking at demographic and traffic patterns, as well as by analyzing historical home values for the neighborhood.

Savvy investors use the rent paid by their tenants to pay down the principal of their loan on the property. This reduces the amount of interest they’re charged over the lifetime of the loan, which increases the equity of their property. In addition, the rent money they receive also helps them cover their living expenses until they’re able to sell their investment property.

While it may be tempting to purchase properties in hot markets, a long-term investment in real estate requires patience. This is especially true since property prices can rise and fall unexpectedly, which could negatively impact your investment portfolio.

To mitigate these risks, it’s helpful to have an exit plan in place, says Eric Swanson, vice president of EP Wealth Advisors in Torrance, California. Start by thinking about how much you want to spend on your purchase and what your goal is for the property. Then, scout out locations and rental markets that fit your investment needs. It’s also crucial to focus on the neighborhood’s affordability, as the cost of a property influences its demand. If the neighborhood is too expensive, it won’t attract a lot of potential renters, which will limit your growth opportunities.


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