“Know when to Hold em” Did Kenny Rogers Have it Right?
How to Find Great Buy & Hold Real Estate
Simple Acquisitions is areal estate syndication company that partner with private investors to buy multi-family properties in exchange for an equity share. Welcome to the second segment of our new Smart Investor Real Estate Quick tip series!
This blog series sheds some light on key aspects of real estate investing, so you can make informed decision about investing in this great real estate arena. So let’s jump right in!!
There are many ways to invest in real estate. Our current and primary focus is on buy and hold real estate.
So what makes an investment property a good candidate for a buy and hold exit strategy?
Firstly, it needs to have great rental potential. Good buy and hold real estate will be located in an area with a pool of available and qualified renters who will occupy the property, thereby generating steady rental income.
So to do that you need to choose a market with both a growing population and economic growth year over year. People go where the jobs are. Then you need to drill down into the neighborhoods within that market and choose one that has the essential elements that renters look for: Good schools, proximity to public transit and retail, and low crime, etc. There are a myriad of factors that goes into choosing a market that is ideal for buy and hold real estate.
Another important element is it also requires the potential to increase in value over time. Appreciating markets are great for investors. There’s nothing like having your asset appreciating naturally over time without really doing anything differently with your property. Our exit strategy with buy and hold properties is never solely to count on natural appreciation. For us it’s an added bonus. We want our properties to be cash flow positive from day one of takeover. Banking on strong natural appreciation can be risky as it’s not easy to forecast how real estate markets will react to the cycles. So tread lightly and really do your homework.
When you don’t have naturally great appreciating markets, you can still get appreciation. It requires a little extra effort. This manual manipulation is called forced appreciation. The key is to buy under-performing properties that allow you to implement strategic changes and improvements that can result in increases in income and reduction in expenses. When this happens you get an increased net operating income, and as a result your property goes up in value. And voila…you have forced appreciation.
For us as syndication company, we provide our investors a preferred share upon closing. So, if we can implement value add strategies, and then provide our investors even higher return as we hold the property, then that is a huge bonus for our investors.
To learn more about multifamily investing and buy and hold real estate get out free video series here…..
That’s it for the Smart Investor Real Estate Quick Tips. Until Next time..Bye!