Buy and Hold; a thing of the past? - Posted by adamliebs

Posted by Stacy (AZ) on April 11, 2003 at 12:35:18:

Good advice, Ken. Just because most of the people on this site seem to want to quit their jobs and become full-time investors, it doesn’t mean that’s the only way to do it.

Investing in rentals on the side is a smart move for those that want to stay employed.

Buy and Hold; a thing of the past? - Posted by adamliebs

Posted by adamliebs on April 10, 2003 at 13:10:10:

I am curious as to why so few people seem to talk about the buy and hold approach to REI on this site. From the majority of books that I have read on the overall concept of REI it seemed to me that buy, holding and renting out was the best way to build a cash flow machine that let you get out of the “rat race.” I know that that approach is a marathon not a sprint to the finish, but what kind of nest egg is being built by rehabbing and retailing. I know the lump sums of cash are greater when it comes to rehabbing and flipping but what is the light at the end of the tunnel to that style of REI. Thanks for your input.

Re: Buy and Hold; a thing of the past? - Posted by Mark (SDCA)

Posted by Mark (SDCA) on April 11, 2003 at 15:10:12:

Buy and hold is the absolute best wealth building tool.
However it is not sexy. It does not depend on amazing deal making. So it’s not covered much here.

Mark

Buy and Hold; a thing of the past? - Posted by ken in sc

Posted by ken in sc on April 11, 2003 at 10:05:06:

The responses you are getting are generally on the money. Not as much glamour in buy and hold, but excellent long term potential. Personally, I think that anyone in this business who does not buy at least a few to hold while rates are this low will be mad at themselves when rates go back up to 9%. I do not agree with Russ that this is a creative board and since we pay a lot of cash down for rentals that there is little discussion. I have 35+ houses and put less than $25,000 down total for the whole bunch. I did this using various creative techniques. Go back and read “Nothing Down for the 90’s” by Allen. Learn about 1031 exchanges. Get John Schaubs tape course “Investing in Houses” - at $150 bucks it is fairly cheap and has a wealth of info. Take advantage of the low rates! It is truely hard to mess up borrowing money at 6% for 30 years on an appreciating asset.

Ken

Re: Buy and Hold; a thing of the past? - Posted by Rick (mo)

Posted by Rick (mo) on April 10, 2003 at 21:24:01:

Buy and Hold; a thing of the past…No
Buy and Hold; is a thing of the future…

Re: Buy and Hold; a thing of the past? - Posted by RichV(FL)

Posted by RichV(FL) on April 10, 2003 at 19:35:24:

I buy and hold also. But in between that we buy and sell (rehabs, flips, etc).

Its a good way to build a reserve fund for your rentals. And it helps pay those mortgages off.

And no way is buy and hold a thing of the past. I own a few free and clear and my goal is to own them all that way.

I dont want to have to live off of Social Security (oxymoron). By the time I retire it wont exist anyway.

I’d rather live off of my real estate.

Good Luck,

RichV(FL)

Re: Buy and Hold; a thing of the past? - Posted by Russ Sims

Posted by Russ Sims on April 10, 2003 at 17:33:12:

Since this forum is all about creative real estate transactions, it’s pretty clear why most folks don’t talk much about buying and holding properties: it’s because in order to get a property to cash flow, that is to say in order to realize a profit every month after all expenses on a rental, you generally have to buy at a pretty good market discount and be prepared to pay cash (whether it’s your cash or that of a lender). So much of creative REI involves buying on terms, whether it be via “subject to” or lease option, or owner contract etc. And if you’re buying on terms you won’t often be able to buy at well below market.This will make it hard for a given property to cash flow. If you CAN buy at well below market, often you’re using private money with high payments…not good buy and hold financing. Of course there’s plenty of exceptions, I’m just speaking in generalities.

NO WAY is it a thing of the past - Posted by David Krulac

Posted by David Krulac on April 10, 2003 at 17:06:21:

its not as exciting as flipping, l/o , etc.

Its boring, but its get rich slow at its finest. David Schumacher wrote an excellent book “Buy and Hold” My review is on Amazon.com at this url:

If buy and hold is boring, tenant maagement is drugery. Nobody ever said with a straioght face that having tenants is fun and exciting.

David Krulac
Central Pennsylvania

Re: Buy and Hold; a thing of the past? - Posted by Shawn J. Dostie

Posted by Shawn J. Dostie on April 10, 2003 at 14:52:14:

I am most definitely a buy and hold investor. I own my own business, don’t trust the stock market, and like to buy things that I can see. My exit strategy is to have my tenants pay for my homes, their maintenanse, and day to day management, and live off their income in my golden years, and then have my heirs figure out what to do with them. Not very glamourous but hey, they help my net worth tremendously, and I won’t have to depend on Social Security.

Good Luck,
Shawn(OH)

Re: Buy and Hold; a thing of the past? - Posted by GL - ON

Posted by GL - ON on April 10, 2003 at 14:22:57:

There are plenty of buy and hold investors around (including me).

We seldom have much to say on this board. What could we say? That the property we bought 5 years ago is still the same except it went up another $187 this month?

One of the great things about buy and hold investing is, PROCRASTINATION PAYS!!!

What other business could you be in, where the longer you put off selling your goods, the more profit you make?

There is a post somewhere down the board from some guy who just found out the property he bought a year ago for $152,000 (with positive cash flow) is now worth $200,000 and he is antsy to sell it. Is he crazy? No, he reads this board with all the frenzied stories of flippers, wholesalers.LO’s etc. and thinks he must be doing something wrong because he made $48,000 in one year sitting in his LA-ZEE-BOY doing nothing.

Really one style is working for income, the other is investing for the long term. See also Frank Chinn’s story about the property his father bought for $25,000 in 1965, which he now owns free and clear, makes $70,000 a year off of, and has made $1.4 million on so far. And is still not thinking of selling.

Are you doing RE full time? - Posted by randyOH

Posted by randyOH on April 11, 2003 at 11:41:35:

Hi Ken,
Your approach to REI seems to be similar to mine. So I just wanted to compare notes. Are doing RE full-time with your 35+ properties. About how many hours per week would you say you spend on the RE biz? Are you planning to increase your holdings? If so, about how many properties are you planning to end up with? Do you do L/Os or straight rentals?

I am just part-time at the moment and I am trying to decide how far I want to go with REI. Appreciate any input you can provide.

I have relatives in Spartanburg and Gaffney. Are you anywhere around that part of the state?

I find your postings interesting and informative. I look forward to hearing from you.

Regards,
Randy

Re: Buy and Hold; a thing of the past? - Posted by adamliebs

Posted by adamliebs on April 10, 2003 at 21:32:07:

This is the avenue I want to take in my real estate investing. I had no idea that my post would create so many strong responses. I only asked because no one wrote about that strategy being successful. Thank you everyone for your input. Now I believe in my overall strategy it is just a matter of executing it. Thank you again!!!

Re: NO WAY is it a thing of the past - Posted by BrokerScott (Mich)

Posted by BrokerScott (Mich) on April 11, 2003 at 13:44:08:

Re tenants: No it is seldom fun but it sometimes can be exciting. Anything over 2 police cars is exciting! LOL Scott

Re: Buy and Hold; a thing of the past? - Posted by BILL TAYLOR

Posted by BILL TAYLOR on April 10, 2003 at 15:22:25:

Shawn sounds like a real good sound plan. We do this a bit modified. We take that same house that we have held and rented and hope to sell it to a current resident and convert that sale to a 1031 and go out and buy another great deal or two with the money. In this you you will be able to increase your cash flow with the same money you had in that home and not increase your debt.

RE full time - Posted by ken in sc

Posted by ken in sc on April 11, 2003 at 12:21:25:

I am in Columbia, just a couple hours from your “kin” as we say here.

I am full time. My career started in appraisals 15 years ago. After 6 years I went into business for myself as an appraiser and also began buying rentals. So it has taken 9 years to acquire the 35 properties. Over the past 5-6 years I have been rehabbing houses and doing creative financing also. I have probably done at least one deal using every kind of technique. I like ls/op’s the least. I enjoy rehabbing - just the process and watching a house go from ugly to new gives me satisfaction. I wholesale a lot more than I used to. My rentals are for the long run, not short term. Short term cash is from buying/selling, appraisal business, and I also manage properties for other investors. Will I buy more rentals? Probably. But I have met my goals as far as numbers so I would buy more houses as investment in order to eventually use the equity to pay down other mortgages.

I think owning some rentals and having a “normal” job is great. There is no reason why you must yearn for self employment and do all that. I happen to like it and with my appraisal background and contacts it was a natural thing to move into. But you could easily have 5 - 10 rentals and manage them yourself on the side. If you love your job and are good at it, stay there and invest on the side.

Ken

or the tenant that wanted to trade rent for… - Posted by David Krulac

Posted by David Krulac on April 11, 2003 at 14:34:30:

ah, but that’s another story.

Re: RE full time - Posted by Alex Franks

Posted by Alex Franks on April 12, 2003 at 14:22:59:

Ken
IM also in south carolina,Rock hill .Was wondering if I could just send ou some questions from time to time .Have my first two properties under contract,trying to sell them before closing.They are foreclosures.Any advice would be great advice .Thanks again for your time.