With a spectrum of possibilities, real estate investments can be confusing for most new investors. Despite all the various investments options available, there’s one every one-time investor can’t have enough of – rental properties.
This term is often known as “buy and hold properties.” Although investors have been intimidated by real estate, buy-and-hold properties have become one of the best investments in the industry.
For those of you that aren’t familiar with the term buy-and-hold properties, we’ve got your backs.
Let’s dive deeper into what buy-and-hold properties are and why they’re a great investment.
What Are Buy-And-Hold Properties?
Buy and hold property is an investment in which investors can purchase a property and hold it for a certain period; a buy and hold property is usually suitable for the long run. Moreover, the owner can rent the property out until they plan to sell it.
Furthermore, the buy-and-hold property is a preferred and frequent investment option due to the long-term profit and short-term cash flow it offers. The rented property generates short-term income that can be valuable for savings and mortgage pay-offs.
Moreover, real estate properties increase in value over time and eventually allow investors to profit when they sell those properties.
Benefits of Buy-And-Hold Properties
Now that you’re familiar with a Buy and hold property, here’s why it’s a good investment.
Rental Income and Financing
Real estate investors can rent out these properties, bringing in a reliable monthly cash flow. Moreover, they don’t have to depend on selling off the property to generate revenue. According to studies, numerous buy and hold properties generate 4% to 10% return on investment (ROI) only on rental income.
Moreover, owning a property is quite beneficial for the funding of other investments. Most investors leverage the equity to finance other real estate investments.
With time, properties appreciate and tend to get a higher property value. Property owners can seize this opportunity to sell their properties for increased revenues. Moreover, as the property appreciates, the inflation goes up, which can be a valuable tactic to protect the investment portfolio.
Buy and hold properties can have numerous benefits. However, amongst these benefits, one seals the deal – tax benefits. Buy-and-hold properties allow you to benefit from the following tax deductions:
- Property taxes
- Property depreciation
- Mortgage interest
- Mortgage insurance premium
- Repair and maintenance costs
What makes buy and hold properties stand out is there are no restrictions. Yes, investors use it as a strategy for long-term investment, but they can sell it whenever they want. Moreover, no agreements or contracts are imposed on purchasing or selling a property at a specific period.
However, if you’ve acquired a loan, you’re obligated to pay off the mortgage within the specified time.
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