When you\u2019re getting started in real estate, the scope of possible investments can feel daunting. Do you want to focus on rental properties? Or do you dream of fix-and-flipping? Perhaps you\u2019re a wholesaler in the making or eager to invest in notes.<\/p>\n\n\n\n
But of all the investment options, there\u2019s one first-time investors turn to time and time again: rental properties. This method\u2014also called \u201cbuy and hold\u201d\u2014involves (as you might guess from the name) buying property and holding it as a long-term investment. Instead of immediately \u201cflipping\u201d the property by selling it to a new buyer, buy and hold investors rent it out.<\/p>\n\n\n\n
Buy and hold is a residential real estate investment strategy in which an investor buys a property they plan to own over a long period\u2014anywhere from five to 30 years. The value increases over time, and the investor enjoys a stable monthly cash flow from the rental income. These properties can be single-family homes, apartment buildings, or other multifamily options like duplexes and triplexes.<\/p>\n\n\n\n
Once the property\u2019s value exceeds the money the investor put into the property, they can sell for a profit. (Or keep receiving rental income.)<\/p>\n\n\n\n
Skipping the \u201crental\u201d portion of buy and hold isn\u2019t typically an option. In most cases, investors can\u2019t leave rental properties vacant over time and make money. If they do, the property can fall into disrepair and reduce or eliminate the investor\u2019s profit when they decide to sell.<\/p>\n\n\n\n
Buy and hold cash flow<\/a> should cover, at a minimum, the cost of owning and maintaining the rental property<\/a>\u2014including the monthly mortgage payment. Essentially, the monthly rent income exceeds the property\u2019s monthly ownership cost. If so, the investment property provides the investor with monthly positive cash flow.<\/p>\n\n\n\n That\u2019s why, in a buy and hold strategy, an investor makes money in both the short and long terms.<\/p>\n\n\n\n Let’s get started.<\/p>\n\n\n\n