5 Reasons Why I Don't Buy & Hold Rentals

I frequently read on the forums at Bigger Pockets about a strategy for cash flow. Buy and Hold rental properties. While, I love the concept of making monthly cash flow. I cannot stand all the hidden pitfalls and traps, that are associated with rental properties. I understand that of you manage everything properly, you would be able to live a great life from the money you make.

So why, doesn't everyone do this? I have five reasons, and to me they all make sense. To others, you may be able to get past them. I am going to count down from five to one.

Reason #5: Tenants don't always pay their rent or anything else for that matter.

While, there are rules and laws in place to aid and protect you when this occurs, it is still costly, inconvenient, and a outright waste of time. Your losing money every moment that the occupant remains without paying. You evict (cost money & time), they damage the property (more money & time), then you have to wait for another renter to qualify (more money & time). Yes you account for this in your calculations before you buy & hold the property. But what happens when the deadbeat, basically destroys the place beyond repair? You get left holding the bag, and they won't even show in court.

Reason #4: Dealing with management companies, if you must.

10% of your money month in and month out, to pay someone to watch your investment. Why? Because you live 300 miles away? Don't want to do the work yourself? You have no clue as what to do? To me all these apply at one time or another and are a waste of time and money as you "learn the ropes."

Reason #3: Insurance, why are you paying more?

A typical investor pays more for insurance on a rental property, than they would on their own home. Why? Don't you qualify the renters, so that you shouldn't need to pay more? I cannot see paying more for something that I am not living in, yet investors do.

Reason #2: Rehabs, repairs, contractors, and routine maintenance.

This almost made the number one reason, but didn't because of the fact that I'm lazy and won't do physical labor. I have no inclination, time or understanding on how to perform repairs, estimates or calculating costs. And to be honest, it hurts my head just typing about the subject. Of course, what can beat that 3 AM telephone call about the toilet backing up, or a water main busts. I am so not dealing with any of it.

Reason #1: I can get monthly cash flow without any of the headaches.

Owner finance, even if it is a second note on a property, will give you monthly cash flow. You gain 100% of your investment plus interest. If structured properly, the monthly payments can be all profits. I have tricks that I have used so that I have zero risk. I plan on selling my tricks later so sorry; I am not saying how to perform them now. But just note, I do practice what I preach and will provide actual verifiable examples in my educational courses. The funny thing is, they aren't new, just that they aren't well described. Which makes the concepts difficult to understand.

Don't worry if you buy and hold rentals, you have far stronger stomach than I do, or at least more patience. Like I said earlier, I'm lazy, and don't do physical labor. Which means, you have one less investor to compete against while trying to get the 2%, 50% or 70% rules to fit your target property. My target properties have two numbers and they are 0 and 100. Zero risks, zero total cost of ownership, and 100% total profit. My only expenditure will be time, and it is the time it takes for me to achieve my targets.