Buy and Hold, Does It Really Make Sense?
I was once a buy and hold investor. Then one day, my light was turned off by the power company, in the house I lived in.
How could that happen? I had 40 houses, but I was always robbing Peter to pay Paul. Edison, the power company was Peter, so once they caught up with my tricks, my light was shut off.
I was frustrated and very broke. Then one day I attended Ron Legrand's seminar and he spoke about quick flips.
His presentation was so good, I paid to follow him to Las Vegas to hear more.
Since then, I have quick flipped over 400 houses.
So each time I hear new investors talking about buy and hold, I feel real bad. Today I ask myself, why would anyone buy and hold?
I once hired an assitant who is a real estate agent. During the interview, she told me she was an investor. Then I asked her, how many properties she had. She stated that she had three properties, one of them she had owned for over 12 years.
Then I asked her. "How much money are you making? She said Nothing, the rentals were barely breaking even and one was vacant.
Then I asked, "how much have you made in 12 years? Nothing she stated.
So the question is, does buy and hold strategy work for new or veteran investors?
This is a debate that everyone should contribute to?
Should you buy and hold? What if you are cash flowing a few hundred dollars a month?
Let's do the math. I buy a property with no money down. I flipped it in 90 days and made $40,000
You are a buy and hold investor, you buy a property, rent it out and you have a cash flow of $150 per month after paying your mortgage.
How long will it take you to accumulate $40,000? The correct answer is 266 months or 22 years.
So do you want to wait 22 years to make $40, 000? or do you want to make the money now so you can accumulate enough $40,000 to actually pay cash for a few deals in a few years and then think about buying and holding?
Which leads me to the one reason why buy and hold can make some sense.
If you are retired, you don't want to earn the peanuts interest paid by banks. It may make sense to buy a property cash, rent it out and get above average return on your money.
Another way it makes sense is if you are buying units and can buy enough and get to a cash flow that can replace your current income.
So let's hear from newbies and veterans, does it really make sense to buy and hold?