With the Valley’s housing market stable, affordable interest rates and a high demand for rental homes, now is a good time to buy and hold investment real estate.
Of all the potential ways to grow wealth, there is strong belief that purchasing long-term rental properties is one of the most effective. It is an age-old plan. In fact, John Jacob Astor, a famous real estate investor and America’s first multi-millionaire once stated that if he could go back and change one thing in life, he would have bought every square inch of Manhattan and held onto it.
More recently, Warren Buffet was quoted saying, “Buy it (property) thinking you’ll hold it forever… our favorite holding period is forever.”
Buying and holding real estate requires less capital and offers more control to the Investor than most other forms of investing. The formula is based on a simple plan of action. Research and analyze, purchase, manage and maintain. Then, watch your portfolio grow.
To accomplish the plan of action, you will need a team of professionals behind you. First is a good Realtor that understands investing in real estate.
Good real estate purchases require understanding the market, having access to the best opportunities and having the judgment to help you eliminate potentially bad buys.
The key to successful purchasing is research and analysis. If the numbers do not work, do not buy it.
The most important numbers for investment properties is cash flow. The market will always fluctuate up and down. But if you have leveraged the investment by putting a good percentage down, mortgage the balance and have a tenant in place covering the payment, you will have the opportunity over time to take advantage of appreciation while your tenant helps increase your equity every month.
As you accumulate more hold properties, you will need to manage and maintain them. Professional property managers have true systems in place to help you manage and maintain every aspect of your properties and help you run those properties like a business.
Some services they provide are leasing, managing tenants, maintenance and repairs, and help with all the record and bookkeeping required.
If one investment property can help grow your financial position, what would multiple properties do over time? If done right, buying rental properties for a long-term investment can increase your monthly cash flow and grow your net worth while using other people’s money. In addition, your debt will decrease monthly from your tenant’s payments while your equity increases.
Holding real estate is the ultimate “get rich-slow scheme” for Investors. Establishing a strong team of good professionals including a Realtor, financial advisor, and property manager will help you find, purchase, manage and hold investment properties.
Buying and holding properties can create residual income while growing wealth and help you on the road to financial freedom.
-Bonny Holland, of Keller Williams, Sonoran Living in Ahwatukee Foothills, can be reached at 602-369-1085, leadingluxuryexperts.com or on Facebook and Twitter.