Buy and Hold Real Estate: being a property owner on an investment property can produce income and long-term capital appreciation.
- Buying property and holding on to it as a long-term investment can yield real life-changing money. Most other investments offer either a consistent return (i.e. annuities) or the potential for equity appreciation (i.e. stocks). Real estate offers both. Good buy and hold investments offer positive cash flow from rent(s) that not only offset expenses and debt, but also provide a monthly income.
- An asset makes you money, and by renting your home you turn it into an asset. And if the investment property carries a mortgage, the cash flow allows an investor to pay back that mortgage without spending any of their own money. Instead, the tenant pays for it.
- Rental property values (hopefully) will climb over time, and if the property rents for more than monthly expenses there will be additional monthly cash flow. That’s the goal!
- Many real estate investors and owners start their path to financial growth renting out their homes as they upgrade to bigger or better houses. This may also help fund retirement – by acquiring multiple properties over time, the cash flow on the rentals could provide monthly rental income by the time retirement rolls around.
- With Rental properties you can also borrow the bank’s or someone else’s money to increase the potential return. In other words, you don’t need to have 100 percent of a property’s purchase price on hand to be able to buy it. Rental properties also potentially allow owners and investors to buy properties for less cash than might be needed to purchase stocks or other investments.
- The real estate market will go up and down, but the beauty of rental properties is that demand will never end. People always need a place to live.
Having a Property Management Company helps deal with various issues and helps alleviate owner stress and responsibility.
- It is always good to have help in in case of unanticipated problems. Tenants don’t always pay rent on time, which can throw off your anticipated monthly cash flow. They also sometimes don’t take good care of a property, which means an added cost of repairing the property as needed. However, no matter what issues an owner might face your property management company is there every step. Usually contracted on a monthly fee basis, your property manager will:
- Work with you to make the property look its best for showing (including scheduling any repairs needed)
- Schedule and be responsible for all showings
- Advertise for, find, communicate with, and screen any potential tenants
- Run all credit and background checks and review and process the applications
- Finalize and sign the lease
- Use a convenient online portal to collect monthly rent from your tenant(s)
- Track all financials and ensure timely payments to owners
- Respond to maintenance requests and schedule and follow through with all repairs
- And also file evictions if needed
There are many ways to finance your new investment including
- Borrowing against the equity in your home. These types of loans tend to carry low interest rates and reasonable fees. (This also effectively makes you a cash buyer, which can make your offers more attractive to sellers.)
- Owner financing is often a way to buy an investment property with little or no money down.
Let us here at All County Metroplex Property Management know if we can help you in any way managing your new investment!