The real estate market is ever-changing. With interest rates rising, fix and flipping properties isn’t the easy money-maker it used to be. People often have to hold real estate longer and need to generate revenue from it as an investment property instead.
Thus, the chief economist of Zillow, one of the country’s major real-estate marketplace companies, recommends the buy and hold strategy in place of short-term investment tactics. Doing this could be more profitable in the long run, as investors can buy properties at a low cost and sell them for a higher price once potential homeowners are interested in the market again. If you have clients that are new to buying and holding real estate or want to know how to make it easier, keep reading below:
Assess the local market
The first thing to do is assess the property’s potential market. You’ll find it difficult to sell it later if there aren’t interested buyers in the area.
To do this, research the property’s location. It should have a high population growth and high home appreciation rates to ensure that it’ll be easy to sell once the time comes. A few factors you should pay attention to when assessing a local market are population growth, home affordability rate, and homeownership rate. High numbers will tell you that the area is a great place to buy and hold a property. You can also look at its walkability and proximity to school districts.
Gain insight from a real estate expert
If you’re still unsure about a property after your assessment, get a real estate expert to help you gain insight and a deeper understanding of the market and your potential property.
In particular, get a real estate consultant to advise you on your decisions. They conduct extensive research to help you make the best decision to achieve your goals. They’re real estate license holders or Counselors of Real Estate designates, too, so you can rest assured that they know what they’re doing. You can access a real estate consultant by inquiring at a consulting firm or requesting referrals for an independent consultant.
Use financial data to determine profitability
Besides getting advice on real estate decisions, you must also look at a property’s financial history before purchasing it. You must determine whether it has profited over the years from different owners or if its value appreciates regularly.
If you’re not an expert on finances, a financial analyst can assist you in assessing the property’s history. These professionals are responsible for analyzing past and present financial data and estimating future revenues and expenditures. For example, they can organize financial data into reports that show the property’s yearly growth. This way, you’ll be able to discern if you’re making a sound financial decision by understanding the property’s history. You can hire a financial analyst by looking at online job portals.
Find good tenants for the property
While holding the property, you must ensure it doesn’t lose value. This means maintaining its appearance and quality by finding responsible tenants that won’t cause damage or harm.
To find some, take professional photos of the property for listing purposes and only post on reliable real estate websites, such as Realtor.com. You should also conduct background checks on the tenants, such as their eviction and criminal offense history. Finally, inspect the property before they move out, so they can compensate for any damage.
Add value to the property
Aside from maintaining a property’s look and quality, you must contribute to increasing its value before finally selling. This may mean renovating, changing the floors, or repainting the walls. You can also add a home security system, upgrade its landscaping, and change the bathroom hardware.
The property must be presentable and attractive to buyers, so they’ll be willing to pay the amount you’ve set .
Find the right lender
Aside from assessing the market and property and ensuring that the property increases its value before you sell it, you must prepare for the financial aspect of buy and hold.
Finding the right lender is essential to guarantee you'll receive the finances and support for your clients buy and hold strategy. TVC Funding loans are competitively priced with no hidden fees, transparent communication, and quick results. We’ll help you with the loan program that is right for your client. Among our values are transparency and efficiency, so you can be confident we will provide high-quality loan solutions for your borrowers. Contact us today to learn more.
Article written by Roan James