Buy and Hold Forever or Continually Trade Up
After reading some recent blog posts on BP this topic has me at a crossroad. On one hand I can see where continually trading up may indeed build ones empire faster...I think. In regards to trading up SFH rentals there are significant costs associated with the trade up...realtor fees, make ready to sell rather than rent again, holding costs during the transaction, depreciation recapture and capital gains if not doing 1031. Of course on the other hand holding the property forever is a case of diminishing returns...eventually a new roof, HVAC, deteriorating galvanized pipes, cracked slabs, make ready between tenants, etc. Another consideration now is these low interest rates. One of my SFH has a 4% fixed 30 year loan. I almost hate to sell that property just because of the loan rate.
To me it does seem that keeping your money moving by purchasing, renting for a year or two and then selling and trading up is the more aggressive and more prosperous route. Now this is what I have done...buy, hold, wait, save and repeat. This is incredibly slow. The saving part is incredibly boring. Working a full time job also only allows for a certain amount of time to do all this. A lot of work and time can go into purchasing just one SFH. All this depends on market cycles of course.
I would like to hear from some of the successful investors and get their opinions. Since we are in a sellers market (at least in Houston) I am trying to decide if it is time to start trading up.