Buy and Hold: Planning Your Real Estate Investment Future

Posted by Chris Clothier on Sat, Apr 4, 2015

buyandholdrealestateThere are many, many different types of real estate investments. When it comes down to residential real estate, there are some pretty distinctive lines. Single-family homes and multifamily properties are just one division, but one differentiation affects how investors invest: those in the fix and flip game and those interested in buy and hold real estate.

What’s the difference?

Fix N' Flip VS Long Term Investment Properties

The concept of flipping is something many, including those outside of the real estate business, are familiar with. That’s because fix n’ flip projects make for great television (if you like that sort of television). Owners snatch up a property with problems, overhaul it with careful, smart renovations and turn around to sell for profit. The shows are cut to introduce drama and tension and in most cases they showcase a huge win for the investor.  In thirty minutes time they have successfully flipped another house!

Some real estate wizards are great at flipping. There’s a certain high to the instant gratification and clear, tangible results of a flipped property.  There is also a very, very real possibility that your flip will turn out nothing like the television shows.  Real estate investors lose money every day flipping properties.

Even though buy and hold real estate isn’t great material for television, though, we’d argue that it has more potential in the long run for real estate investors.

3 Reasons to Buy and Hold Rental Properties

Time is on Your Side

Buy and hold real estate investors are masters of the waiting game. They don’t have to worry about current market prices for their rental properties because they don’t intend to sell. In the meantime, they have the benefit of the positive cash flow of monthly rental payments. Over time they grow their equity, pay down the mortgage and that positive cash flow becomes even more positive. The ultimate goal? Having a paid-off property that generates maximized monthly income.

Related article:  3 Tips to Being More Profitable in 2015

Options Open Up

With the increase of positive cash flow from a few strategic long term investments, investors earn the capital to pursue other opportunities. These few reliable properties help mitigate risk and allow for portfolio diversification — even for flipping properties! These good long term investments should also appreciate over time — so if the day comes that you wish to sell, you can at a higher profit than you would receive from a quick flip. Having a few sold buy and hold properties allows you to safely build the portfolio you want with increased financial security.

Funding Your Retirement

When you dig down into buy and hold, the purpose is to provide and maximize consistent positive cash flow. While investors can and will run into roadblocks and there will always be costs associated with rental properties, you can still realize the security of passive income through a buy and hold strategy.

With a turnkey investment company (such as ourselves) the burden of maintenance, management and renovations can be mitigated, helping ensure that you have the financial freedom to do exactly what you want to do.

Do you prefer to buy and hold, flip, or do some combination or the two? Share your preferences in the comments.

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Topics: buy and hold real estate, flipping houses