Investment StrategiesWhy Is the Buy and Hold Strategy Best in Real Estate Investing? by Victoria Daibes November 21, 2017February 7, 2019 by Victoria Daibes November 21, 2017February 7, 2019High rental income in a prime location and an appreciating asset in a growing housing market are two major reasons why buy and hold strategy is the best strategy in real estate investing. Many real estate investors recognize the benefits of a buy and hold strategy and go ahead and search for positive cash flow properties on websites like Mashvisor to kick start their real estate investing business. Not only do you gain financial security in the form of steady cash flow, but you become your own boss and real estate becomes your business with many perks, including but not limited to the tax advantages. Whether you are a novice real estate investor or one with lots of previous experience, the buy and hold strategy will always make sense, if chosen in a strategic location with proper due diligence. Conducting proper due diligence mitigates the risk of incurring unexpected expenses which might hinder your profit potential in the long run. Related: How Do You Find the Best Rental Investment Property Analytics?Buy and Hold Real Estate Investing Is a Long-Term StrategySimply put, buy and hold strategy is when real estate investors buy a rental property, i.e., a single family home, a multi family home, or a condo, in order to rent it out to tenants and make money in the form of rental income every month. The buy and hold strategy is the conventional real estate investing path and one that comes with minimal risk for investors, given positive housing market trends. The Advantages of the Buy and Hold Strategy in Real Estate Investing1. AppreciationIn a nutshell, appreciation is an increase in the value of an asset over time. If you buy a rental property in a prime location, the real estate property’s worth is bound to increase over time, if all else is equal. Land is a great example of an appreciating asset because it has an indefinite useful life and it will always be in demand. Likewise, real estate and stocks are appreciating assets and will be worth more in the future than at the time of purchase. Depreciating assets include cars and computers because they have a finite useful life and eventually decline in value and performance. In simple words, the buy and hold strategy allows real estate investors to make money from their investment properties in the long term.2. Tax PerksLike business owners, real estate investors are granted tax advantages for buying and selling real estate. For one, you can write off the cost of depreciation from your tax savings and in turn save money from your rental property ownership. In other words, you can shield your income potential from certain expenses incurred for growing and managing your real estate business. Expense deductibles in the buy and hold strategy include but are not limited to:DepreciationMortgage loan interest Maintenance and repair expensesLegal and accounting expensesEducational expenses related to real estate investmentsTravelling expenses for repairing and managing rental propertiesProperty taxes3. Steady IncomeThe best perk of all in the buy and hold strategy is the steady (and passive) rental income which landlords receive on a monthly basis as a result of renting out their properties to tenants. Selecting the right tenants is crucial to maintaining a stable source of rental income from your real estate business. Maintaining good relationships with your tenants is another crucial point to keep your tenants happy for a long time. Choose ‘em wisely, folks. Related: How to Become a Real Estate Investor Using Mashvisor4. Financed and LeveragedThe buy and hold strategy in real estate investing does not mean exhausting your savings funds to get into the business; on the contrary, getting a 20% down payment on the house is the only hurdle to buy a rental property and get the ball rolling. Financing your investment property with a mortgage loan on the house not only gives you high leverage, but it also allows you to build up your home equity and gain 100% home ownership down the line.5. A Hedge against InflationThe housing market is positively correlated with inflation; if general prices go up, so will the cost of housing. Owning real estate through the buy and hold strategy is a great hedge against inflation and a way to protect your wealth during such times.6. Long Term Financial SecurityAs previously mentioned, the buy and hold strategy in real estate investing is a long term one and it has the profit potential to secure your retirement funds and be a stable source of rental income for many years to come. Real estate investors can accumulate wealth over time by owning numerous real estate properties and thus reap financial rewards in the long term. Real estate gives investors the financial independence and security to live a comfortable life and enjoy a happy retirement. Real Estate Will Always Be the Ideal Investment If you are wondering if the buy and hold strategy is for you, consider it so and don’t look back. Not only is this a safe and risk free investment, but it is also ageless because you can hold a real estate property for a long time and reap the rental income until you decide to sell it for a big profit. Of course, by the time you decide to sell, appreciation will be on your side and the value of the rental property will have skyrocketed and will make you rich. Getting a mortgage is the best way to finance a rental property for many real estate investors because it is affordable and relatively easy to obtain. With a 20% down payment out of your own pocket, you increase your home equity and get the benefit of owning the whole real estate property. If you have enough equity, you can leverage another loan against the value of the rental property you actually own. So, in basic terms, you are able to control 100% of the investment with as little as 20% of the value paid out of your own pocket. A portion of the rental income you receive from your tenants will go towards paying off the mortgage loan, simultaneously increasing your home equity each month. You now owe less and have more equity built up on your investment. Win-win!Related: These Are the Best Cities for Investment Properties in the US Right NowConclusionInvesting in buy and hold real estate is a great investment strategy for anyone looking to build wealth and gain financial security in the long run. Financing a rental property is not only affordable and accessible (given you have a good credit score), but it is also cost effective. Mortgage is the best way to finance a rental property because you avoid the need to exhaust your savings funds to pay for the house from the get go.Head over to Mashvisor to kick start your real estate business now! Start Your Investment Property Search! START FREE TRIAL AppreciationBuy and HoldFinancingLong-Term StrategyRental IncomeTax Benefits 0FacebookTwitterGoogle +PinterestLinkedin Victoria DaibesVictoria is an experienced content writer who enjoys writing about all aspects of the real estate market and industry. Previous Post Buying an Investment Property Is Easy. Just Follow These Steps Next Post Should You Be Investing in the Philadelphia Real Estate Market at the Moment? Related Posts These Are the Best Ways to Make Money Online as a Real Estate Investor Most Bizarre Real Estate Investing Properties Buying Rental Properties or Real Estate Wholesaling: Which One Is the Better Strategy for You? The Pros and Cons of Engaging in a Real Estate Investing Partnership Rental Properties in Real Estate Investing – Beginner’s Guide June 2018 Witnessed a Rapid Increase for Investing in Luxury Properties Are Property Investment Companies the Way to Go in Real Estate Investing? How to Buy Foreclosed Homes: The Expert’s Guide for Real Estate Investors For Newbies: How to Get Started in Real Estate Investing Fix or Flop: 3 Mistakes to Avoid During a Fix n Flip Buy One Rental Property Per Year: A How-To Guide Offshore Investments: Should Real Estate Investors Consider Them?