A buy and hold strategy is one of the most effective ways of quickly establishing regular cashflow. There are a number of ways you can go about dealing with real estate, but not all of them will get you the results you want. This makes it important for you as an investor to weigh your options. Rest assured, you will come to realize that using the buy and hold strategy in real estate is a great option. If you still are not convinced, here are a few benefits:
Generally, the price of land only appreciates. This means that as an investor, your equity will increase exponentially over the time you hold the property.
Great Source of Income
You have to keep in mind that not all investments are going to work the same way. Some will offer potential for equity appreciation or a consistent return, but in the case of real estate, it offers both. The latest findings have shown that the average annuity pays out no more than 3% per year, but an investor who makes even a half decent buy and hold investment can beat these rates any day.
Depreciation Is Not Necessarily a Bad Thing
Most people are not aware that the IRS writes off any property that is more than 27.5 years old. Depreciation is not exactly an income and is referred to as a liability, but it is only an expense on paper primarily because the costs of keeping a property in good condition can be paid out of the rent earned. This actually leads to the elimination of tax obligations due to ‘losses’ on the positive cash flow from the real estate property.
These are 3 of the benefits of buy and hold real estate.