FIX N HOLD
Buy and hold real estate is a long term investment strategy where an investor purchases a property and holds on to it for an extended period of time.
The investor typically has the intent to sell it down the line, but will rent out the property until then to help with buy and hold real estate financing.
ADVANTAGES OF HOLDING
Higher returns over time: Buy and hold investing is generally a great option for building more wealth and cash flow, because properties can rise in value over a longer period of time. The short-term real estate fluctuations basically have an a negligible impact on properties over time.
Less pressure: Holding properties is a slower process over time. The value doesn’t come from the just the resell but from the rise in the market. The market has little effect on your cash flow, and there’s far less involvement required to get your returns.
Steady passive income: Renters are often easier to find than buyers. When you have renters, they are paying you monthly, which means a steady source of income, especially with multiple properties. If using a property management company, vet them carefully, as they can make or break your investment.
Ownership: In a “normal” real estate environment, holding properties allows you to always build wealth. Without the pressure on the investor, you don’t have to sell immediately, you can hold onto the property for as long as you wish.
DISADVANTAGE OF HOLDING
Fluctuating market conditions: One huge drawback of this investment strategy can come from normal market fluctuations. When you're looking at a long-term picture, a market with home values rising, can swiftly turn the other direction and lose value and then take a years to regain the loss.
Management issues: Even if you have the services of a Property Management firm to handle tenants, you still have management duties. Keeping a close eye on the property management company, is a form of management duties which means time and money.
Lack of good tenants: Although there are more renters than buyers generally, finding those perfect tenants so that you can maintain a steady cash flow may be hard to come by. The laws change constantly and the last thing you want to do is to create issues due to lack of being informed.
THE BOTTOM LINE
Michael has a strong background in site acquisition, zoning regulations, entitlement process, project management and construction management with a proven track record for timely project completion.