How Long Is Long-Term? Solid Solutions To Mapping Out Your Buy And Hold Strategy
The buy and hold strategy is a property investment advice that will help individuals gain financial freedom for life, provided that they follow the relative strategies that will give them long term income. There is an interim period, however, and not all people are able to sustain the property for such a long time. Some might let go of the property when situations arise. Others might also find it very expensive to maintain the property and increase its value as expected over the next several years. Here are some guidelines on the approach.
The Duration Period
When using the buy and hold strategy in property investment, individuals should be aware about the time period. There is no universal time frame in holding on to property. The average period lasts 5 to 10 years, but others might even keep the property for 15 to 25 years depending on how the market value changes. Some people base the holding period according to price percentage. If the original value of the home has increased 100% to 300%, it is indicative that they can already release the property. The price increase will be dependent on numerous factors like the current economic trends, politics, the developments in the area and neighborhood and the overall growth of the city or state. Some individuals might discover that the price significantly increased in just 2 to 3 years but most experts say that the best time to sell is when the property has already stabilized in price. The owner should refrain from selling the property too soon regardless of how market values change.
The key to maintaining the property and maximizing profit during the interim period is by offering the place for rent. The tenants will then be responsible for paying taxes, fees and maintenance costs that will ultimately increase the overall value of the house. Some people will improve the space a little to accommodate more renters. The tenants will shoulder most of the expenses and the owner might even get to keep some of the profits for himself. The buy and hold strategy greatly depends on this approach to keep the owner from paying more and having more capital to hold on to the property for several years. If the investor does not offer the place for rent, it will equate to significantly higher costs and fees.
Not all investment property investors are ready for the buy and hold strategy. It requires a lot of capital to maintain the property for a very long time. Investors should not invest in property that they will consider selling after a short while if they suddenly come across financial blocks. It’s equally important to research on the different areas first and compare properties according to the value increase after a number of years. There are key areas the quickly rise in price. Check properties that experience price booms every now and then and observe the trend before purchasing. Look around and talk to neighbors to get all the details.