Top 10 Reasons to Buy and Hold Real Estate

Top 10 Reasons to Buy and Hold Real Estate

3 min read
Ken Corsini

Ken Corsini is a seasoned real estate investor and business owner based in Woodstock, Georgia. Ken is best known for his role on HGTV’s hit show “Flip or Flop Atlanta,” and has flipped over 800 houses in Metro Atlanta since 2005.

Experience
With over 15 years of experience in the real estate industry, Ken has expanded his original flipping business into multiple independent real estate businesses, including Red Barn Real Estate, with over 180 agents in Metro Atlanta across four offices; Red Barn Construction, a custom home-building company specializing in modern farmhouses across North Atlanta; Red Barn Renovations, a full-service renovation company; Black Oak Mortgage, a direct lending company based in Woodstock, Georgia; and InvestorSumo, a technology company focusing on CRM and data needs for real estate investors.

Having been involved in thousands of transactions and having owned over 800 houses, multiple commercial and multifamily properties, and more, Ken brings a wealth of knowledge and experience to the BiggerPockets community. He has authored over 100 blogs and currently hosts the “Best Deal Ever Show” on the BiggerPockets YouTube channel. He is also the host of the popular Deal Farm Podcast.

Ken is currently writing a book in conjunction with BiggerPockets called “Profit Like the Pros,” scheduled for release in Fall 2020.

He and his wife also run Roc.Star Kids, a non-profit organization focused on the needs of children and families in the fight against childhood cancer. For more information on this very personal cause, check out their story here.

Press
In addition to HGTV and HGTV Magazine, Ken has been featured on The Today Show, People Magazine, The LA Times, Think Realty Magazine (cover), TV Insider, In Touch Weekly, Life and Style Magazine, The Wrap, The Atlanta Journal Constitution, UGA Today, US Chamber of Commerce, PopSugar, Entertainment Magazine, and a number of local periodicals.

Education
Ken has a Business Degree from the University of Georgia and a Masters Degree in Building Construction from Georgia Tech.

Accreditations
Ken is currently licensed as a general contractor (commercial) in the state of Georgia.

Follow
RedBarnHomes.com
Instagram @kencorsini
Twitter @kencorsini
Facebook

Read More

Many articles on BiggerPockets are geared towards the “business” of real estate investing (ie. flipping, wholesaling, etc.). But most people consider real estate investing the buying and long-term leasing of real estate. While this can be a daily business as well, most investors that buy real estate to hold, do so for the long term benefits and passive nature of the investment.

I personally believe buying and holding real estate for the long term is one of the most effective wealth building strategies available to the general population. Here are my top 10 reasons why I like this model:

1.) Appreciation –

Despite the recent real estate crash, when you look at real estate over the long haul, it’s accurate to assume some level of appreciation in your real estate holdings. Yes, there are market cycles where values rise quickly or fall quickly, but by and large, real estate is an asset class that appreciates. In addition to this, investors have the ability to research market dynamics and make fairly knowledgeable decisions based on anticipated appreciation for a particular market.

2.) Passive Income –

Holding real estate can be a very passive investment that provides returns much higher than could be obtained through other passive investments (ie. stock, bonds, etc.). With the ability to outsource property management, accounting, etc., investors can  still make  good returns while playing a very hands-off roll in the investment.

3.) High Leverage –

Real estate investing is one of the few investment vehicles with the availability of high leverage (ie. financing). Try walking into your local bank and asking for a line of credit for $800,000 secured against only $200,000 of your cash for the purpose of investing in gold, stocks, mutual funds, commodities, etc. They would probably laugh at you. But, if you walked into that same bank and told them you wanted to buy 10 houses at $100,000 a piece …. they would usher you over into their mortgage division to begin working on your 10 loans.

4.) High ROI –

With the ability to acquire high leverage comes the ability to obtain a very high return on investment. Not only does your monthly cash on cash return go way up when you use leverage , any appreciation on the property amplifies your ROI as well. This is because the entire asset appreciates rather than just the amount of money you invested as a down payment.

5.) Principle Paydown –

A commonly overlooked benefit of investing in real estate is the fact that while your tenant may provide you with positive cash flow above and beyond your mortgage payment, they are also helping to pay down the mortgage as well. While the principle portion of the mortgage payment is minimal at first, every year that you own the property the amortization of the principle amount of your loan speeds up. Before long, you are shaving thousands of dollars off of your loan amount every year until ultimately you own the property outright.

6.) Tax Benefits –

As  taxpayers in a tightening tax system, any kind of deduction can be helpful. Owning real estate allows for the deduction of mortgage insurance as well as the depreciation of the property itself. In addition to this, real estate can also afford you the opportunity to defer tax liability by using 1031 exchanges to continue investing funds in new properties while deferring tax liability indefinitely.

7.) Hedge Against Inflation –

Many analysts believe inflation is coming (if not already here). Owning real estate and using leverage (especially at these low interest rates) is a great way to hedge against coming inflation. If prices rise, so will the cost of housing … owning an asset that rises with the tied is a great way to protect your wealth.

8.) Increasing Rents –

Very few would speculate that housing rents will decrease over time. Most analysts have already stated that rents are expected to increase over the coming years. Owning real estate not only allows you to lock in housing prices and interest rates that are at all-time lows, it also provides you with the an opportunity to increase future cash flows by increasing rents … thus increasing your ROI in future years.

9.) Retirement Income –

For those investors that look at real estate investing as a very long term proposition, the potential to retire on rental income is very real. I know many investors that have owned real estate for multiple decades as a retirement strategy and ended up very wealthy as a result. Over a 20-30 year period of time, investors can own numerous properties outright and create a net worth well into the millions. Additionally, the cash-flow that can be generated from properties that no longer have mortgages can be very nice supplements to pensions, 401Ks, social security, etc.

10.) Creative Exits –

One of the best characteristics of real estate investing is the plethora of strategies that can be employed when selling a property. Real estate is nice because it doesn’t have to be a permanent proposition. You can own a property for 1 month or 50 years … it’s completely up to you. When it comes time to sell a property, investors can use any number of different strategies to maximize profits.

Photo: dalylab

Many articles on BiggerPockets are geared towards the “business” of real estate investing (ie. flipping, wholesaling, etc.). But most people consider real estate investing the buying and long-term leasing of […]