Buy and hold real estate investing strategy is exactly what the name suggests; it involves buying an investment property with the intention of holding it for a long period of time- typically five years or more. So you’re not just purchasing and flipping an investment property for a quick profit.
During the “holding” period, the investment property is set up as a rental. Renting out the property is where the return on investment comes in. If buy and hold investing is done correctly, you can benefit from both short term gains through positive cash flow and long term real estate appreciation.
Buy and hold investing could be an option if you’re a beginner. It could also be a strategy for experienced property investors looking to build wealth over time from property appreciation and equity buildup.
Types of buy and hold real estate
Rental properties come in all different shapes, sizes, and purposes. To make sure you’re making the most from buy and hold real estate investing, you should identify which type of property/ rental strategy you want to employ.
Here are a couple of different types of income generating assets you can invest for a buy and hold investing strategy:
Turnkey real estate
Investing in turnkey real estate is when you buy a move-in ready property, which already has professional property management and also usually has tenants already living in it. So everything is basically taken care of. You simply “turn the key” and have before you a strong investment property.
Vacation rental property
The vacation rental market has been very strong recently. Investing in short term rentals is a great rental strategy if you choose the right market at the right time.
Single family home
This is usually used with the traditional long term rental strategy; you invest in a residential home and rent it out to a tenant. Many beginners choose single family homes as a way to get a feel of the real estate investing industry. One rental unit and one tenant keep things simple.
Multi family home
If you’re looking for more, a multi family home is a great option for a buy and hold investing strategy. A multi family property is a building with more than one housing unit (2-4 units). They are pricier than a single family home, but because you’re renting multiple units to multiple tenants, you’ll be generating higher rental income. It could be a great option for strong cash flow and building your investment portfolio quickly.
Commercial real estate
Buy and hold investing strategy isn’t just about residential real estate. Investors can also purchase a property used for business purposes like an office building or retail store. However, commercial real estate investing could be a bit more complex, especially for beginners so research this strategy well.