Have you been exploring the world of buy-and-hold property investing? This long-term approach to real estate investing may not generate the quick returns of fixing and flipping, but it can yield big wins in the long run.
By holding a property for longer instead of making immediate improvements and selling quickly, you can ride out any short-term market fluctuations and enjoy a stable monthly rental income. Since rental increases correspond to rising prices, you won’t have to worry about inflation taking a chunk out of your return.
The strategy of buying and holding real estate may sound simple. However, there are many techniques and strategies that you can use to improve your return on investment.
Getting the Biggest ROI From Your Buy and Hold Properties
Market appreciation is not the only way to generate a return on your buy and hold property. Here are some of our top considerations to help you improve the ROI on your real estate investments.
Find the Right Property To Buy and Hold
A buy-and-hold investment comes with different considerations than a fix and flip. Make sure you use multi-sourced data to research comparables on other units that are similar to your property, or properties you are considering for purchase. This helps you understand the upsides and review your returns. For example, does the property have HOA fees you'd like to avoid? PropStream is a great source for this data.
Maximize Your Rental Income
Even if your chosen property won’t rent for an optimal price right now, that doesn’t mean that you can’t put in some strategic upgrades to boost its rental income in the future. To ensure you’re using your money well, focus on upgrades that offer the most ROI for rental properties. These include things like smart home features, lighting, and more modern flooring. You should also make sure you are familiar with local rental bylaws, since having tenants can limit your ability to change the rent.
Have a Contingency Plan To Cover Your Budget and Cashflow
While renting offers a steady passive income stream, some complications can arise that will eat into your budget and time. The most common are:
- Rent defaults
- Property damage
It’s hard to predict with 100% accuracy if or when one of these incidents will occur, but you can protect your investment by building in safeguards. A thorough tenant screening process will help ensure you’re renting to reliable tenants. Rent default insurance can further minimize your exposure to this risk.
Keep Your Rental Rates Current
If you don't follow the trends in your area, it becomes even more difficult to recoup or improve on your initial investment. An excellent way to avoid this is to use PropStream's Heat Map feature to follow what's happening and run comps. You can search by county, city, or even a specific neighborhood. Then, pull up data including regional price growth and current and past rental values.
Having all this information at your fingertips ensures you can make smarter buy-and-hold investment decisions that increase the overall value of your portfolio. Try it for yourself with a free 7-day trial today.