{"id":3433,"date":"2016-09-22T10:10:14","date_gmt":"2016-09-22T17:10:14","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=3433"},"modified":"2016-09-22T09:21:51","modified_gmt":"2016-09-22T16:21:51","slug":"real-estate-investing-perfecting-the-buy-and-hold-strategy","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2016\/09\/real-estate-investing-perfecting-the-buy-and-hold-strategy\/","title":{"rendered":"Real Estate Investing : Perfecting the Buy-and-Hold Strategy"},"content":{"rendered":"<p style=\"text-align: justify;\">Matthew Martinez, president of Beacon Hill Property Group in Miami, now invests exclusively in commercial real estate, including residential multifamily, but he cut his teeth buying three-family homes in the Boston area. He had no experience. Like most newbies, he didn\u2019t know what he didn\u2019t know.<\/p>\n<p style=\"text-align: justify;\">\u201cIgnorance is bliss,\u201d he said. \u201cI didn\u2019t realize that real estate investing had so many parts. Sometimes you need to get into it just for the experience.\u201d<\/p>\n<p style=\"text-align: justify;\">For Martinez, who has written three well-received books on real estate investing, including \u201cHow to Make Money in Real Estate in the New Economy,\u201d it\u2019s important to get in the game. What you learn during your first experiences will make the next few transactions easier, and hopefully, more profitable.<\/p>\n<p style=\"text-align: justify;\">\u201cReal estate is definitely a place where you can build net worth and build a passive income stream,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">Fortunately, he was able to tap the brain of a long-term investor in local residential properties he knew if he ran into trouble.<\/p>\n<p style=\"text-align: justify;\"><strong>Don\u2019t time<\/strong><\/p>\n<p style=\"text-align: justify;\">Martinez said that buy-and-hold investors should not try to time the market. They can\u2019t depend on homes rising in value. Instead, predicate deals on whether the income stream from rents will be greater than the expenses of owning the property. If this \u201ccap rate\u201d (net income divided by expenses) is positive, then you have a chance of making profits the entire time you own the home. If you\u2019re lucky, it will also appreciate in value by the time you sell, increasing your total profits.<\/p>\n<p style=\"text-align: justify;\">Before buying a property, Martinez closely examines both sides of the cap rate equation to see if each could be improved upon. If he calculates that he could increase his top line by, for example, fixing up a place so that it would command a higher rent, that would increase his cap rate. Or maybe he can decrease his divisor by, say, installing an energy efficient HVAC system. Then, again, his cap rate would go up.<\/p>\n<p style=\"text-align: justify;\">To limit her costs, Danielle Moy, a Coldwell Banker Residential Brokerage agent in suburban Chicago who buys with other investors and on her own, often concentrates on the condo market. Condos usually have fewer unexpected expenses. Repairing burst water pipes, replacing a furnace, or dealing with other expensive mechanical problems \u2014 all costs borne by the owners of single-family homes that can result in a big hit on an investor\u2019s profits \u2014 are handled by condo associations.<\/p>\n<p style=\"text-align: justify;\">Even though she has to pay association dues, which cuts into her income stream, the stability of this expense makes it easier to accurately figure out her expenses. Too, it makes managing the properties much easier; the association handles most of the emergencies that arise.<\/p>\n<p style=\"text-align: justify;\"><strong>Be hands-on<\/strong><\/p>\n<p style=\"text-align: justify;\">When starting out as a buy-and-hold investor of private homes, it\u2019s good to manage the properties yourself, according to Martinez.<\/p>\n<p style=\"text-align: justify;\">\u201cYou\u2019ll understand better how to add value,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">You\u2019ll be in a position to know, for example, what improvements are likely to result in the biggest return on your investment. And once investors grow their portfolios and need to hire property managers, they\u2019ll be better at supervising those operations as well.<\/p>\n<p style=\"text-align: justify;\">Moy keeps her expenses low by working hard at prospecting for bargains. She\u2019s always on the look out for homes that haven\u2019t hit the market yet.<\/p>\n<p style=\"text-align: justify;\">\u201cWhen I go to estate sales, for instance, if the owners are there I talk to them and ask if they\u2019re interested in selling the properties,\u201d she said.<\/p>\n<p style=\"text-align: justify;\"><strong>Help can be hard to come by<\/strong><\/p>\n<p style=\"text-align: justify;\">Moy also maintains close relations with contractors and handymen. That\u2019s vital. Investors need trusted contractors so repair costs don\u2019t spiral out of control. They also need to have the work done quickly so the home can start generating rental income. It can\u2019t sit idle for a few months while the contractor disappears. The taxes, utilities, insurance, and other monthly costs add up too quickly.<\/p>\n<p style=\"text-align: justify;\">\u201cYou have to have a reliable handyman.\u201d said Moy. \u201cOtherwise, you can spend a ton of money.\u201d<\/p>\n<p style=\"text-align: justify;\">That\u2019s buy and hold in a nutshell: Find a good buy, maximize your rents, and control your expenses. But it\u2019s not easy to do it successfully. Like any other business, it\u2019s complicated and many investors fail because they\u2019re too casual or not hands-on enough to make it work.<\/p>\n<p style=\"text-align: justify;\">\u201cThey\u2019re are always opportunities out there, but you have to be committed to making a business out of it,\u201d said Martinez.<\/p>\n<p><a href=\"http:\/\/blog.coldwellbanker.com\/real-estate-investing-perfecting-buy-hold-strategy\/\" target=\"_blank\">Real Estate Investing : Perfecting the Buy-and-Hold Strategy<\/a> by Les Christie | Coldwell Banker Blue Matter<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Matthew Martinez, president of Beacon Hill Property Group in Miami, now invests exclusively in commercial real estate, including residential multifamily, but he cut his teeth buying three-family homes in the &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2016\/09\/real-estate-investing-perfecting-the-buy-and-hold-strategy\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-3433","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Real Estate Investing : Perfecting the Buy-and-Hold Strategy &#8226; 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