Guide to buying and holding real estate

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Being financially free is synonym to never having to work for money again. If you own real estate investments, then you will have enough cash flow in order to cover all your monthly expenses. The most widespread form of real estate investing is house flipping. The reason why quickly fixing and flipping has become so popular is that it can be very profitable, especially when the market is experiencing a downward movement. Nonetheless, if you honestly want to start investing, you should try buying and holding real estate North Carolina instead. This investing technique is used by some of the wealthiest people, but it can bring you many benefits as well. Buying and holding a property requires you to accomplish some tasks.

Find the right property

Similar to other forms of property investment, you will need to find the right house in order to make the project worth your time. In order to determine which property has the right price, you should follow the “Rule of 72”. Basically, you have to see how long it will take the investment to double its value. What you have to do is take the return rate and divide it by 72. For instance, if you have an investment that has a 6 percent rate of return, you divide the return by 72 and thus obtain the predicted time for your investment to double in value. The actual time will be 11.9 years.

Making a purchase

You will need to get an accurate “after repair value” from the real estate broker and do not pay higher than that number. Take into consideration elements such as neighborhood, school district reputation and general location. Ideally, you should find an ugly duckling in a good neighborhood and with no major structural damages, but regardless of the purchase that you make, it must create cash flow. This is why it is important to evaluate thee holding costs and the current rental market because it can change overnight.

Finance your deal

There are several ways in which you can finance a buy and hold deal, some requiring more cash than others. You can consider saving money from the job and using the additional cash to buy an investment property or you can flip one house and use the money you make to make a down payment on another one and hold it. There are of course private loans, namely loans form private individuals which are more advantageous that going to the bank. You should also consider partnering with someone who has money.

Find tenants

Finding tenants is a step that many investors omit. It is within your best interest to find tenants that create as few problems as possible. If the tenant is always late on rent, then you will not make enough money to invest in other properties. Once you have found the right tenant, you can sit back and relax. All you have to do is collect the rent and enjoy financial freedom.

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