Minimum amount of years to hold MFH before selling?

[Norman Berman]

Hi folks,

I'm researching out of state multifamily investing for a buy-and-hold strategy.

Is there a general minimum number of years you plan to hold a property before considering selling? Let's assume a market that's not appreciating wildly.

Thanks!

[Hayden Harrington]

Hi Norman, your financing will really dictate your exit options. Some loans will have a lockout period and then a prepayment penalty in the form of yield maintenance or defeasance if you exit your loan early. I've seen some people get into really bad loans before and we weren't able to make the numbers work on our end to be able to buy the property, so they were stuck with it. With cap rates compressing over the last decade across the board, I would expect hold times to be longer. Especially in markets that aren't experiencing a ton of growth. 

Like Andy mentioned, it will come down to what your goals are. If you get a deal that has solid cashflow, you may want to just hold it. If you have a significant amount of equity built up from appreciation, you may want to exit and move on to another project. I would just determine what you are trying to accomplish first and then find a deal and financing strategy that will help meet your goals!