Abandoning The Buy And Hold Investment Strategy

Over the past few months, we have started to see more investors start to jump ship and list their rental properties for sale. Therefore, starting the shift into a buyers market for condo resale. But why? Isn't the buy-and-hold strategy the best investment around?

Taking a dive into the details, here is a quick list of why the buy-and-hold strategy is so good!

*Recently sold listing with our team at Justin Bregman & associates. Buy-and-hold = $100,000+ appreciation.

The income from real estate is just the cash flow that an investment property brings in. Many new investors believe that if they buy enough properties, they will just be able to live off the cash flow in the Islands somewhere. However if you use debt, this process could take quite a while. The extra income should just be viewed as the cherry on top, until the property is mortgage free of course!

Equity

One of the big things successful buy-and-hold investors do is get long-term bank debt on their properties and get rid of private loans, and hard money loans.

Yes, in the beginning, particularly with a 30-year loan, you are not paying off much principal. But each month you pay off more and more principal and less and less interest. So there is a bit of exponential growth here.

Equity is a powerful thing. Build more of it, and see a higher return on your investment when it comes time to sell. Allow your home to lose equity, and you might stand to lose cash once you offload your property. 

Appreciation

In the long run, real estate goes up in value. Yes, there are some exceptions like the current condo market compared to the beginning of this year. However, making sure you make an educated purchase with a real estate agent can in the end get you the most appreciation the quickest.

Ways to beat the trends of real estate are all in the numbers, taking a look into neighbour stats and beating the flock.

Leverage

One of the big advantages of real estate is leverage: the ability to use other people's money.

This is just the beginning of building your real estate portfolio. In the future, you can refinance and leverage the built-up equity into a down payment to finance other properties, thus starting the cycle over again as your equity continues to rise.

Looking to buy, sell, or invest? Message us for more details.

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