In light of all the uncertainty in the property investment market at the moment now is a good time to focus on buy and hold and consolidate your position.
Buy and hold is exactly what it says on the tin. It means that you focus on purchasing those prime residential or student properties that will supply you with enough cash flow every month to cover all your monthly expenses.
With a buy and hold approach to property investing you acquire properties that will give you a positive cash flow each month even after you’ve accounted for mortgage payments and any rental expenses.
Holding means exactly that. You hold on to the property for a long time and reap the benefits of regular rental income. Essentially, with a buy and hold strategy to property investing, your investments become a cash cow which provides you with a regular income every month. And if you buy the right property in the right location and it delivers consistently good income, why should you ever sell it? As Warren Buffet, the American business magnate once said, “Our favourite holding period is forever.’
In a way it’s a bit like Dividend Growth Investing in the stock market. With this approach, the main focus is on rising dividend payouts, not on the underlying value of the stock. As long as it pays out a good, regular divided then the fluctuating nature of stock prices is irrelevant. The same goes for buy and hold. Whether house prices are going up or down is immaterial if the property is delivering a good monthly rental income.
With any buy and hold strategy it’s all about doing your homework. You need to research properties that will deliver the cash flow that you are going to need. This means that you need to take the emotion out of property buying and remember that you are purchasing to make money, not for a property to live in yourself.
Capital appreciation is a nice to have rather than a need to have when it comes to buy and hold. The chances are that in today’s market you may be fortunate enough to get both but that shouldn’t be your primary focus. Your focus needs to be on choosing properties in the right location at the right price and being mindful of what your target audience for that property would be looking for.
If you would like to get the inside-track on what properties would make good buy and hold purchases, then contact us now on 0333 3001 888 and we’ll be happy to guide you through the numbers.