Investing in buy-and-hold real estate can help you create passive income that can
sustain you for years to come. However, this long term strategy comes with unique
risks that you should consider carefully before committing to it.
The biggest risk with buy-and-hold real estate is market volatility. Real estate prices
and rents go up and down, sometimes dramatically, over time. The good news is
that historically, property values have risen over the long-term, helping to cushion
your returns in case of a downturn.
One of the other key risks with this investment strategy is the need to maintain your
properties over time. Whether you hire a property management company or manage
your rentals yourself, maintaining rental properties requires an ongoing commitment
of time and money. The good news is that you can reduce these expenses by
implementing tenant retention programs and doing thorough tenant screening to
find tenants who will stay for the long-term.
Another important factor to consider is the need for a cash reserve. Savvy landlords
set aside a portion of their rental income into an emergency fund for repairs,
insurance deductibles, and other unexpected costs that arise over time. This
ensures you have a source of funds to cover your mortgage payments even in the
event of a vacancy or other unanticipated expense.
Finally, it’s important to remember that buy-and-hold real estate is a long-term play
and you’ll need to commit the time and money necessary to build a successful
portfolio. It may take 5 or 10 years to see the return on your investment, but over
the long-term, this strategy can help you achieve a steady stream of recurring
income that can last for life. For more info https://www.ateambuyshomes.com/we-buy-houses-illinois/
Achieving consistent, dependable income is the goal of every investor. Buy-and-hold
real estate offers a number of benefits over other investments like stocks, mutual
funds, and annuities that can help you reach your financial goals and achieve true
wealth.
Unlike stocks and bonds, real estate is not exposed to the same level of market
volatility. This makes it a more stable form of investment that can deliver strong
returns over the long-term. Additionally, you can use leverage to increase your
buying power and generate higher than average returns.
The most common way to purchase a buy-and-hold investment property is to
finance it with a mortgage. This typically involves passing a background check and
providing proof of income to an underwriter. A loan officer will also look at your
credit history, retirement and bank account statements, and title documents to
determine if you qualify for financing.
Once you’ve secured financing for your buy-and-hold property, it’s important to
make sure that you choose the right neighborhood. Ideally, you’ll find a property in
an area with a solid economy that will attract tenants and keep them there. This will
help you minimize vacancies and maintenance costs, as well as improve your
chances of selling the property for a profit in the future. It’s also important to choose
a property that’s within your price range and in an area that’s growing.
