Buy & Hold Real Estate Investment Strategies

Buying and Holding real estate has become increasingly popular. So what types of properties and strategies are there for buy and hold investors to take advantage of today?

Buy & Hold Real Estate Investing

At the beginning of 2015 the United States homeownership rate had dropped to the lowest it has been since 1993. And if top level analysts are right it could fall even further before it goes up. Much of this trend is owed to the ongoing flood of U.S. foreclosures, and ensuing credit and mortgage borrowing challenges. People want to buy, but they just don’t qualify. So demand for leasing rental property is huge. The most furious it has been in over 20 years.

At the same time, rock bottom mortgage interest rates, and rising rents have made buy and hold real estate investing more attractive and easier for those interested in passive income, high returns, and long term wealth building vehicles. But there is more than one form of the buy and hold investment strategy. So what are your choices?

Single Family Rentals

The press has focused a lot of attention on the surge in acquiring distressed single family homes and renting them out. This can include buying, rehabbing, and managing properties, or turnkey real estate investing. Warren Buffett was recently asked about the current real estate market on CNBC. This was his response “If I had a way of buying a couple hundred thousand single-family homes and had away of managing them I would load up on them.” He also stated that “If I was an investor that was a handy type and I could buy a couple of them at distressed prices and find renters, I think it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.” So if Warren Buffett is telling you where you need to invest where do you think you need to invest?

Investing in Multifamily Apartments

While single family rental homes are trending, multi-family properties are also smart choices for buy and hold investors too. Some investors prefer them. This is especially true for the seasoned real estate investor. This is often due to the perception of being able to acquire units for less, consolidating property management, the ability to add value with high R.O.I. improvements in any stage of the real estate cycles, and solving the issue of putting more money to work with few deals and transactions needed.

Vacation Rental Properties

As the U.S. economy improves so is the vacation rental market. Vacation rentals can be very attractive to buy and hold investors for a number of reasons. This includes; higher monthly rents, reduced management burden, and properties which are in higher demand areas, can lead to faster growth.

Buying & Holding Vacant Land

Vacant land shouldn’t be overlooked either. It can be cheaper to buy and get into, and generally means lower holding costs. Income can even be realized by leasing the land for parking, camping, or farming. Or timber, mineral, access, and air rights can even be leased or sold for income, while the land appreciates.

Owner Financing

Not every investor wants to deal with tenants and property management. One of the hybrid solutions for those looking to minimize taxes and gain passive income is to sell properties with owner financing, or on rent to own programs. There are many variations of this to explore, including seller held mortgages. Creating your own mortgage notes also creates a new income producing asset which can be sold for lump sums of cash as needed.

Ultimately this is a great time for buy and hold investment property. But there is no one right answer. It’s about finding the right fit for you, and your goals.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”