Today, we are going to take a look at another profitable exit strategy – buy and hold property. Buying property to hold and rent is one of the best ways to create wealth because it generates ongoing cash flow and builds your net worth.
Be creative while looking for prospective rental properties. Use real estate agents, property managers, goldmine ads, car wraps, and websites such as Craigslist or Realto as resources for finding properties. Networking events and auctions are also great places to find properties. Offering a finder’s fee is another great way to find excellent opportunities.
When you purchase properties that you plan to hold, you will want to make sure that the property will cash flow. Start by determining what a realistic rental amount is for the property. You can do this by searching for rentals in the neighborhood and talking to property managers. If your rents are unrealistic, chances are, you will have frequent vacancies.
There are many hidden expenses that you need to take into consideration when you are running your numbers to determine if a property is worth investing in. As you are looking at your numbers, consider the following:
- Property management fees – even if you are just budgeting to pay yourself
- Monthly expenses – utilities, yard maintenance, taxes, insurance, principle and interest payments, condo fees (if applicable)
- Cash flow payments to yourself
- Vacancy and repair allowance
It is essential to consider and calculate all of the anticipated costs before investing in a property. Many people try to get the property at a significant discount, but the most important thing is to make sure that the property will cash flow. Our Elite course on Property Management and Cash Flow properties can help you identify all the expenses that you may encounter.
Don’t get trapped by thinking that you can’t take advantage of the market because you don’t have cash or credit. There are several different creative financing techniques that range from lease options to seller financing. There are so many creative options out there, you just need to make it your business to learn them.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.