How to Execute the Buy and Hold Property Strategy - Financial Freedom Friday
realestate epic
2018-03-29
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Wholesaling and flipping is stealing your freedom. The two are a constant battle. You're on the hamster wheel always looking for the next deal and you miss out on all of real estate's best wealth creation attributes.
Consider this… imagine you flipped 20 properties 20 years ago… and then compare that to you haven't bought 20 properties 20 years ago and still had them today… that's quite a different position you'd be in today, isn't it?
When it's said that real estate is the final frontier where the average person has a legitimate shot at creating real wealth… it's through holding that real estate… NOT flipping it.
Flipping is a much more exciting way to make money… and you can even get RICH doing it, but holding real estate… albeit boring… is a much FASTER way to get WEALTHY… of which that speed… translates to excitement in my world.
So, let me give you 5 hot principles to execute the buy and hold strategy…
Hot Principle #1: You have to know your numbers. What will it cost you to hold the property? Will the income from the property cover those expenses? Will there be something left over for you? You have to make sure the property will pay you while you're holding on to it, not cost you.
Principle #2: Properties don't pay without good tenants. Take your time selecting them. Watch out for criminal records and low credit scores, but most importantly, confirm their ability to pay rent and no evictions allowed.
Principle #3: Good Management. This is as important or more important than the property itself. To find good property managers, ask for referrals from other investors in the area. Then, start your new manager off with just one property and immediately look for a back-up property manager. Diversify your property managers almost as much as you'd diversify your locations and property types… ultimately eliminating all single points of failure.
Principle #4: Profit centers. Most people only look cash flow and appreciation when investing in real estate, but wait! There's more!
Depreciation is a deduction the IRS allows you to take each year for the wear and tear on your property. It won't show up in your bank account, but you'll see it in the form of a smaller tax bill.
Amortization is the paying down of debt on your property. But remember… it's not you paying this down… it's your tenant doing it for you.
Principle #5: Growth. Using the profits from your properties to buy more properties speeds up the growth of your wealth. Refinance, refinance, refinance until your cash flow covers all your living costs, and then start paying down the debt to preserve your cash flow. Refi to grow, pay down to preserve.
One of our Epic Pro Academy members, Ryan Bagley, is a perfect example of someone who smashed the real estate game with the buy and hold property strategy. In just a few years, he retired early from the Air Force and is now relaxing on the beach in Florida. We recently got this message from him:
"Picked up our 26th rental today and crazy
Consider this… imagine you flipped 20 properties 20 years ago… and then compare that to you haven't bought 20 properties 20 years ago and still had them today… that's quite a different position you'd be in today, isn't it?
When it's said that real estate is the final frontier where the average person has a legitimate shot at creating real wealth… it's through holding that real estate… NOT flipping it.
Flipping is a much more exciting way to make money… and you can even get RICH doing it, but holding real estate… albeit boring… is a much FASTER way to get WEALTHY… of which that speed… translates to excitement in my world.
So, let me give you 5 hot principles to execute the buy and hold strategy…
Hot Principle #1: You have to know your numbers. What will it cost you to hold the property? Will the income from the property cover those expenses? Will there be something left over for you? You have to make sure the property will pay you while you're holding on to it, not cost you.
Principle #2: Properties don't pay without good tenants. Take your time selecting them. Watch out for criminal records and low credit scores, but most importantly, confirm their ability to pay rent and no evictions allowed.
Principle #3: Good Management. This is as important or more important than the property itself. To find good property managers, ask for referrals from other investors in the area. Then, start your new manager off with just one property and immediately look for a back-up property manager. Diversify your property managers almost as much as you'd diversify your locations and property types… ultimately eliminating all single points of failure.
Principle #4: Profit centers. Most people only look cash flow and appreciation when investing in real estate, but wait! There's more!
Depreciation is a deduction the IRS allows you to take each year for the wear and tear on your property. It won't show up in your bank account, but you'll see it in the form of a smaller tax bill.
Amortization is the paying down of debt on your property. But remember… it's not you paying this down… it's your tenant doing it for you.
Principle #5: Growth. Using the profits from your properties to buy more properties speeds up the growth of your wealth. Refinance, refinance, refinance until your cash flow covers all your living costs, and then start paying down the debt to preserve your cash flow. Refi to grow, pay down to preserve.
One of our Epic Pro Academy members, Ryan Bagley, is a perfect example of someone who smashed the real estate game with the buy and hold property strategy. In just a few years, he retired early from the Air Force and is now relaxing on the beach in Florida. We recently got this message from him:
"Picked up our 26th rental today and crazy
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