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December 18, 2023 | read

Top Rules Of Buy And Hold Real Estate Investing

Brandon Hall

Real estate investing is among the most popular forms of wealth creation today. While we see trends in real estate investment models such as ‘fix and flip,’ one of the most popular real estate investment strategies is the method of ‘buy-and-hold.’

Buy And Hold

Buy-and-hold investment involves purchasing a rental property or other investment properties for its potential to yield multiple long-term benefits. Rental properties, including multifamily units, can offer not only income from rental but also asset appreciation. The idea that a property can produce continuous cash flow, add diversity to your investment portfolio, and provide an income stream well beyond retirement is what makes buy and hold investing so popular.

Buy-and-hold properties tend to be less affected by market fluctuations than short-term fix and fix strategies that rely more on a seller’s market. When looking for a long term strategy, rather than a quick turn around, buy and hold properties can continue to fare well in volatile markets as their correlation to stocks is relatively low, keeping your investment safe in various economic times.

Like any real estate investment, knowing how to pick the right properties is crucial to its success. There are three strategic rules to follow for buy-and-hold real estate investment to ensure you are heading in the right direction.

Enter With An Exit Strategy

Considering your endgame before purchasing a property will help you determine if it is the right purchase for your needs. Having a proper exit strategy before your purchase keeps your goals in focus and secures your investment. Your intentions of how long you plan to keep a property will help you make wise choices before evening scouting your property options.

Consider Your IRA Options

Look at options of leveraging your IRA assets to purchase the buy-and-hold property rather than taking out a loan. Self-directed IRAs allow investment choices beyond stocks and bonds and maybe a wise alternative for securing funds for purchasing real estate. Retirement funds may be used to invest in undeveloped land, rental properties, and other income-producing properties, giving you greater control over your investing.

Assess Potential

Gauging a property’s potential for producing income is vital in making wise investment choices with buy-and-hold real estate. Look for properties that can be purchased at a low price while considering the location. Slightly distressed properties in good sites can be full of potential, while excellent properties in the less desirable locations may lead to issues down the road. Know the market in your area and rely on data to help you choose wisely.

Professional Assistance

As with any real estate investment strategy, such as buy-and-hold properties, you must have professional assistance from experienced real estate accountants. At The Real Estate CPA, we provide tax and accounting services that allow you the confidence to make crucial decisions regarding your real estate investment options. Call us today and let us help your investments thrive.