Real estate investing is a great way to diversify your portfolio and ensure your investments can stand the test of time.
Although the quick turns of fix-and-flip investing are popular nowadays, many investors still prefer the passive income and long game of the buy-and-hold method. Let's look at how this strategy works for building a solid and diversified portfolio, as well as a few tips for success if you're just getting started.
What Is Buy-and-Hold Real Estate Investing?
When investors hold real estate for an extended period, they are protected from short-term market fluctuations. If they’ve done their research and chosen property in an area with a good potential for appreciation, they can enjoy the passive income from tenants while the property steadily increases in value.
5 Tips for Buy-and-Hold Real Estate Investment Success
This type of investing can be a highly lucrative strategy. However, before you get started buying and holding real estate, make sure you’ve done everything possible to set yourself up for success. Here are five of our best tips.
1. Crunch the Numbers
2. Pick the Right Market
Not every area is appreciating at the same rate. To ensure you’re making an intelligent investment, do plenty of research on the area where you’d like to buy. Some of the fastest-growing real estate markets for 2022 and beyond include Nashville, Raleigh-Durham, Phoenix, Seattle, and Boston.
3. Understand Your Duties as a Landlord
Many investors don't want to be landlords. If you’re in the same boat, don’t worry. You can always hire a property manager who can oversee the property on your behalf. If you plan to do this, factor property management fees into your initial calculations so you can see if the margins still work for your needs.
4. Increase Your Rental Margins With Some Upgrades
If you buy a unit or building that you intend to rent out, you can maximize your rental income by making small yet meaningful improvements. Think about simple updates such as a new coat of paint, refinished cabinets, or better appliances.
5. Know How to Get Out if Necessary
Before you get in, most real estate investors recommend developing a strategy for how you’ll eventually get out. At this point, you should consider how long you’ll want to invest and what factors could make you pull the plug early. This will help you develop a solid understanding of the market that can help protect your investments.
Start Planning Today
Whether you’re a seasoned buy-and-hold investor or just getting started, PropStream’s multi-sourced property data can help you find off-market properties in regions with the most potential. Click here to get started with a 7-day free trial today.