What is buy and hold?
Buy and Hold real estate, characterized by the long-term holding period than other strategies such as fixing and flipping, reaps great long term rewards. These rewards give, and give and finally give more. While it is great to have a mix of quick-cash producing strategies and ongoing passive income, buy and hold real estate is my favorite wealth building strategy.
How real estate produces fruits.
I liken this strategy to growing trees. The homes and multifamily assets are growing trees that, once stabilized with renters and income, begin to produce fruits. These fruits are colorful and tasty and make great snacks or gifts for others. If I were to sell my tree, I would likely get a great return, but then I give that tree to someone else who and will no longer enjoy the fruits in produces.
My personal strategy is to keep the trees (real estate assets) and enjoy the fruits (rental income). Next to having a strong cash position, a strong cash flow position is an important wealth-building strategy. Without strong cash flow, there is the risk of things getting tight, not being able to cover debt service and personal expenses or being unable to generate capital for other investment activities.
What one can do with those fruits.
You see, as long as we still have the trees, we can do either of these things. Aside from the importance of cash flow to meet personal objectives, one of my important missions is to support people in ministry, sharing an important message of love and purpose to those who have never heard it. Like many working people in ministry often have divided interests, their mission and their personal financial needs. My passion is to eliminate that second distraction so that they can focus on the work they are called to do.
I see income created from my real estate investing as a great means to support those ministries. Rather than sell my personal real estate portfolio and make many dollars today, that steady income stream produces many fruits for multiple uses. Similar to stock dividends, buy and hold real estate pays you to own it, only with move advantages.
When to sell.
Of course, there are times to sell the trees, such as in predicted cycles of market correction, having a problem property, being ready to cash in on a property and move to another market, etc. However, many times, as with anything in life, true wealth and rewards come from holding the pattern. To date, I have not sold a property out of my portfolio, but have refinanced, converting some equity to cash, and reinvested that cash into the next project or opportunity that will generate more fruits.
Start growing now.
If you are considering investing and, like me, have never gardened a day in your life, but want to produce an abundance of fruits for your own and others’ benefits, consider the power of buy and hold real estate. Holding the right asset in a great appreciating market where there is rent growth into the future, the cash flow gained produces larger fruits over time!
