3 Stellar Strategies: #3 Buy & Hold

solution Hi Moguls – Matt Andrews back again bringing you the 3^rd and final lesson in our 3-part series about Stellar Strategies.

In the first lesson, we covered wholesaling. I gave you basic investing and wholesaling information, plus I talked about a few examples of some of my real-world successful wholesale deals.

In Part 2, we went over the details of flipping houses and how that arena moves you into doing bigger deals and netting wider profit margins.

Flipping is when renovating and rehabbing come into play… which brings us directly into Part 3 about rehabbing.

In today’s lesson, we’re covering the buy-and-hold strategy—this is where the real money can be made. This is when you buy or gain control of a property for the purpose of holding it long term.

You will then reap the benefits of rental income, tax benefits, appreciation—all the good stuff that comes with holding property for the longer term.

Let’s dive in…

What Does “Long Term” Really Mean?

When I talk about long term, I’m referring to no less than 5 to 7 years. In certain appreciating markets, you can buy a property and in 2 or 3 years turn around and make a profit. But if you’re looking at true buy-and-hold properties it should be longer.

Personally, I like 10 to 12 years. The longer you hold it, the more powerful it can become.

This gives you the ability to have passive income. This is why most investors work their way up to the buy-and-hold strategy. That’s why I develop these portfolios in all the markets I work in. No matter what happens, I always have those little cash-flow engines going.

Literally, I’m making money while I sleep. That’s what’s good, nope, amazing about passive income.

The Hidden Power of Long-Term Investing

The power of holding and controlling properties long term is that it gives you the ability to focus on the important things in your life. When you have lines of passive income coming in, it creates options. It gives you time to focus on other projects; time to design your own lifestyle.

small This particular strategy has created more wealth than any other vehicle in history.

Just ask Donald Trump, Robert Kiyosaki and even the McDonald’s company. McDonald’s has bought and sold more property than you could ever imagine. Real estate is one of the keys to the McDonald’s wealth secret. They are first and foremost a real estate investing company. It’s not about the burgers; it’s about acquiring and holding property long term.

You can make money and get rich using other strategies, but creating true wealth comes through the buy-and-hold strategy.

Alternate Buy-And-Hold Strategies

In addition to rentals, there are land contract deals, lease options and rent-to-own scenarios where you control the properties for a long period of time.

There are also owner finance deals, subject-to deals and notes and non-performing notes.

So, there are many ways you can control properties for long periods of time and get many of the benefits of holding those properties.

Real-World Examples

Example #1
I started out buying and holding properties in Florida, but then I went to Grand Rapids, Michigan. The seller lead for this particular property came from a bandit sign. (I do a lot of bandit signs in the west Michigan market and have a lot of leads come in from them.)

This was an owner/landlord who wanted to sell ASAP. The place was driving him bonkers and he just wanted to get out from under it.

I agreed to buy it for $25k, and it was worth closer to $50k. It consisted of two units and I rehabbed it for $15k. I did have to get rid of one of the tenants because they were not paying.

After repairs, it brought in $850/month. After all other expenses were taken out, figuring in the cost of a property manager, I’m getting a 22% return on my investment. Not too shabby.

hunting Example #2
This one is in Columbus, Ohio. The lead came from HUD. We do a lot of government-owned properties and have a whole strategy of how to acquire properties in this way.

We contracted it for $25k. It was worth about $45k. We rehabbed it for $7k. It then rented for $650/month and the ROI is 18%.

Any time I get a deal that fits these numbers, it’s definitely a good buy-and-hold property. And this one is a great cash-flow generator.

Example #3
The lead for this property in Florida came by way of direct mail.

We contracted it for $70k, and it was worth about $117k when we bought it. We rehabbed it for $5k. Hardly anything needed to be done. It even had nice landscaping in place.

This one rents for $1250/month. This is a nicer property, so the taxes and insurance are fairly high, but it still brings in 14% ROI. Another good example of a great buy-and-hold property.

Hold Notes

I also have 9 properties in Michigan for which I hold the notes. These make me a 20% return on my investment.

When you start putting together a portfolio of good cash-flow properties that are generating income and making money for you while you sleep, it is SO sweet.

The Wrap Up

I strongly encourage you to move your business in this direction, no matter what phase of the business you’re in.

If you’re not holding properties long term now, then it’s time to start directing part of your wholesaling and flipping business to buy-and-hold. Take your profits and invest them in cash-flow, appreciating assets.

Years down the road, you’ll be so glad you did.