Every few years, some investors change their strategies to tackle the challenges posed by the real estate market. Of course, some of these strategies regain their popularity again and again in a cyclical manner. In the current economic climate a wise investor should consider revisiting the tried and tested “Buy and Hold” strategy.
A long time ago, before 2002 at least, you could quite easily find property below the market rate. A sensible option in that scenario was to hold onto the property for the long term. You could be certain of a good profit within three to five years. This of course all changed once the market started booming and property prices skyrocketed. No long-term game was viable anymore and investors stopped buying. But the smart ones waited for the right market conditions to return.
Nowadays such conditions might exist once more. You can purchase properties that will bring a ROI between 23 and 25%, ideal for buy and hold.
To make it simple: Buy and hold is little different from buy low and sell high. If you want to use this strategy, you need to be aware of the long-term changes in the real estate market. Keeping track of supply and demand is essential in order to buy property just before others realize that values are low. Similarly you will need to sell property when the supply market is stretched and prices are at their high.
Having sailed through the recent financial crisis, the market is picking up slowly. This may be just the right time for you to try the Buy and Hold strategy and enter the real estate market.