Investing In Buy and Hold Properties

What Is a Buy and Hold Investment?

Buy and hold is an investment strategy used by real estate investors that are looking to build wealth over a long period of time. In other words, investing using a buy and hold strategy is not for those looking for instant gratification. This type of investment requires patience, however, the reward can be substantial and well worth the wait. Typically, investors planning on using the buy and hold strategy purchase a rental property and plan on holding onto the property for at least 5 years, if not more, and usually refinance or sell only if the timing is right.

“Don’t buy and sell, just buy!” - Forbes Councils Member

This idea stated by Forbes councils member, Simon Mass, in a recent article can be a very effective investment strategy. With the ability to pull equity out of a property using a cash-out refinance, the investor can then use that money to buy another property. The investor can continue to do this as they hold each property and wait for them to increase in value, eventually having multiple streams of passive income.

How To Get Started

First things first, you will need money in order to start making money. If you don’t have the funds readily available to purchase your rental property, then finding the appropriate financing is the first place to start. Fortunately, there are plenty of options available to investors who are using the buy and hold strategy.

Angel Investors

This type of financing comes from friends and/or family. A friend or family member can come into the deal as either a lender or a business partner. While this works well for some, it can be very risky for others, so when approaching a friend or family member for financing make sure they are serious and reliable.

Private Money Lenders

Private money lenders often provide more flexible financing options than traditional lending institutions, like banks, and are generally preferred by investors particularly with buy and hold properties. Loan terms are negotiated to fit the needs of the investor, however, you can expect higher interest rates in exchange for flexibility.

Creative Financing

With this type of financing there are a variety of options. Motivated sellers may be open to lending an investor the money to buy their property offering unique terms to get the deal done. If you choose to seek out creative financing, it is best to enlist the help from a lawyer to ensure everything is structured legally and properly.

Buy and hold is a great investment strategy whether you’re brand new to real estate investing or just looking to expand your investment portfolio. Find the type of financing that works for you and start earning!

CALCAP Lending offers competitive terms on residential real estate investment loans, single family, and multifamily. In addition, CALCAP Lending offers preferred equity investments. Find out how CALCAP Lending can efficiently help you fund your next project by contacting us at 833.816.5580 or visit us online.