Develop a Long-Term Strategy Before Deciding Where To Invest

by |

“Buy and hold” real estate investing has been promoted for years by people like Carlton Sheets or Ron Legrand  for good reason. Investing in real estate is a phenomenal way to build wealth and income. Before I began my investing career, I listened to as much of this educational material as I could get my hands on. This information was pivotal in my development and understanding of the fundamentals of real estate. However, while I had a good grasp of the basic principles of real estate, I did not understand the importance of developing a long term strategy first. Having worked in this business full-time for over 6 years now, I have come to understand how different long term investment goals require an understanding of the many submarkets in my city.

With prices at historical lows, there is an unprecedented opportunity to invest in real estate that is disproportionately lower than rental rates. Where home prices have dropped to half of what they were just 3 years ago (and even more in some markets), rental rates are only slightly lower.  This has allowed investors to buy income producing properties that have tremendous cash flow.

Knowing When You Want to Sell Before You Even Buy

As an investor, cash flow is obviously important, but is it the most important factor? I think many investors like the idea of immediate cash flow but forget to ask themselves how long they want to keep the property.  I would venture to say that having a firm grasp on your long term strategy is vitally important in deciding where to invest. Why? Because some submarkets are excellent for cash flow, but may not be easy to sell in the long run. On the other hand, some markets may not have quite as much cash flow, but may be much easier to sell (and experience appreciation) in future years.

There isn’t a right or wrong answer to this question. Some investors plan on buying and owning property indefinitely. For them, the monthly income stream is the main reason for the investment. In this case, it may be perfectly acceptable to buy in areas characterized by lower owner occupancy rates, cheaper housing, lower median incomes, etc. It may not be the kind of area you or I would want to live in, but that doesn’t mean it won’t be a good long term rental property. On the other hand, if an investor wants to buy in an area that will enable him or her to sell the property at some point over the next 10 years, it may need to be in a different submarket. This investor may need to sacrifice some monthly cash flow for a market with higher housing prices and higher owner occupancy rates. Over a ten year period, this investor may not have made as much money on the monthly cash flow, but will have the ability to sell the property and an opportunity to make money on appreciation as well.

Regardless of your long term plans for an investment property, make sure the market you are buying in aligns with your future plans. There is so much opportunity out there right now – just make sure you are seizing the opportunities that are right for you.

About Author

Ken Corsini

Ken Corsini G+ is the host of the Deal Farm Podcast (on iTunes) and has 10 years of full-time real estate investing experience. His company, Georgia Residential Partners buys and sells an average of 100 deals per year and has helped hundreds of investors around the country make great investments in the Atlanta market. Ken has a business degree from the University of Georgia and a Master Degree in Building Construction from Georgia Tech. He currently resides in Woodstock, Georgia with his wife and 3 children.


  1. Chris Clothier

    Ken –

    That is a really good topic to write about today and a great article! In every city there will be what we call paths of progress and then other areas where progress has already left its mark! Every investor needs to simply “know” where they want to go and it will really help them focus in on the right neighborhoods in a city and if they need to adjust their thinking to be in a path of progress or not. I appreciate you writing on the topic. Great advice.


  2. Great article Ken.

    Long term focus is always needed for success. Without a plan you don’t really have goals, you just have dreams. There are so many ways to invest in real estate that it can be daunting for a new investor to even know where to start. Sometime our cash position or time availiable can limit our choices but as time goes on this always needs to be looked at. Having a plan pretty developed 5, 10, even 15 years out can clear up what one should be doing now to achieve these goals. There are many things that are good to do and spend our time on but by analysing our long term goals and studying our plan we realize where our priorities should lie to be the most successful.

    I purchased my first duplex 5 years ago today (well actually the 25th but it was the day before thanksgiving) and I still live in half with my family. When I was single and starting out 5 years ago I wanted to have this house in perfect condition, which included new furnaces, windows, driveway, siding, decks and a lot of cosmetic work, and now 5 years later I had accomplished this a year and a half early and have acquired several other properties. This also can with accomplishing other goals during this time being getting married, having a child, upgrading in vehicles and building my knowledge on repairs and renovations. I would not have gotten here without having this initial plan because it showed what was possible with a limited income and through the years as my income from my day job rose I was able to follow the plan quicker and effieciently.

    Nothing absolutley nothing is more important than developing a long term plan…. I hope everyone realizes this because it is just so vital.

  3. Great post Ken. You point out some great reasons for choosing the right submarket to begin with. Lower-income areas do make great areas to invest in rentals, but as you say they are not likely to appreciate over time the same way an area with a higher owner-occupancy might.

  4. Great topic here. The important word to focus on in this article is PLAN. Most investors don’t have a written and thought out plan as to what they are trying to do. They dive into real estate head first because they hear there is so much money to be made and then wonder why they aren’t progressing the way they thought they would. It all starts will a plan and I think people forget that plans can change. You can start with a small goals and then work your way up to bigger goals if thing move quicker than you originally planned. But if you don’t have a plan then you have no blueprint for your success and no milestones to reach. “Failing To Plan Is Planning To Fail”

  5. Ken –
    I’m a big believer in engaging low-income and low owner-occupied communities as an investment strategy. When owner-occupancy is low, landlord influence is high. With those dynamics, a landlord is able to lead the neighborhood, make it more orderly, advocate for it, and raise the lid on it appreciation potential.

    I’ve lived through this cycle twice: once by accident, once deliberately.

    Please add this to your list of long-term options. There are a lot of renters hoping we don’t write them off.

  6. This is a well written article on an important subject. My market in Davis,Ca has dropped by about 25% in the last five years and is surrounding by communities like Woodland and Sacramento that has depreciated by over 50%. There is a multitude of excellent investments in this area.

  7. Ken,

    This is a great post. I always tell the people I work with to begin with the end in mind. Plan out for the next 12, 36 and 60 months. When you have that focus in mind, you can start to realize the steps you will have to take to get there. When you know what you want, you will know where to look and of course, make sure you know your market.

    Great post. Keep up the good work.

  8. Al – Great points. I definitely wouldn’t write off low-income, high rental areas as good investment options. There are plenty of investors who have made great income off of properties in these areas.

    Investors just need to go into any investment with their eyes wide open so that they understand the long term dynamics of the investment.

  9. For about ten years I’ve been following a longer term plan with some potential upside that you didn’t mention in your article.

    My theory is that if you really concentrate your efforts in a specific neighborhood, maybe even on the same block, you can make enough of a difference to turn a small neighborhood around. For example, you own a couple homes two doors apart. If you perform the typical low cost “curb-appeal” improvements, then the home in between will sell for a much higher price because the buyers feel comfortable.

    This may take 6-20 years, but you’ve actively added value rather than just waiting around for appreciation.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here