THINGS TO THINK ABOUT BEFORE YOU BUY-&-HOLD

In real estate, buying-and-holding is a long investment strategy. An investor will purchase a property and hold it to take advantage of the long-term real estate appreciation. But what happens during the hold period?

Well, most investors take advantage to rent out the property allowing them to earn income from long-term tenants. Buying-and-holding has great benefits, but before you jump into this investment strategy, here are a couple of things to think about.

BUY-&-HOLD INVESTMENT VALUE

Finding the right property is essential in any real estate investment. So make sure you are in the right market. The market will determine the value of your property and is analyzed by the location, size, age, condition, improvements, and neighborhood.

Another thing to be aware of is the rental market for a property. Is it high or low? A low rent area will decrease the chances of finding a tenant, and without a tenant, you will miss the benefits of a monthly income. Having a high rent area will give you faster results, allowing you to selectively pick your tenant. So once you have the right tenant, it is important to treat them with exceptional service so tenants keep renewing. As long as your home remains occupied, you will see a return each month.

REMODELING?

When remodeling, please, keep in mind that a fix-and-flip and buy-and-hold are not the same thing. A fix-and-flip is a shorter investment with a larger renovation strategy in which you remodel and sell the property right away. When you buy-and-hold remodeling is not at a larger scale, tenants are expecting to come into a livable home, but not a luxury home.

However, keep in mind renovations will increase the value and yield a higher rent as a result, it all comes down to what the tenants’ are willing to pay for the duration of their lease and does it compare with the surrounding home.

MANAGING A RENTAL

When managing a property, three areas need attention, the tenants, the property, and finance. Complaints are inevitable, but knowing some of the common complaints, and how to address the issues promptly shows that you care for them. Non-payment is a hassle, but setting up reminders, auto-pay, and late fee charges can help decrease a non-payment. That is why running a potential tenant's credit report, criminal history, and eviction can save you a lot of headaches.

Landlords are legally responsible of maintain the property in a habitable condition. Therefore, doing regular maintenance on a property can be cost-effective instead of dealing with it once it arises. You may run into large maintenance issues not covered through insurance, so keep your finances in order.

ARE YOU READY?

If you are ready for a long-term commitment, then you are one foot in to buying-and-holding. Look for a high rental area and plan leases accordingly to avoid non-payment or evictions. Get organized and maintain a livable and safe place for your tenants.

Bounce Tip: Monthly revenue should exceed monthly expenses for your property, such as mortgage payments, maintenance costs, fees, interest, and taxes.

If you have any questions don't hesitate to connect with me here on BP. I'd be happy to do anything I can to help you on your journey.

Goodluck