Posted by RichV(FL) on April 21, 2003 at 18:10:53:
Graywolf…
I agree. Buying and selling is a great way to build a reserve fund for rentals.
I do a combo of both…I like to buy and sell and I own a bunch of rentals also.
Even though I am a buy and hold person i enjoy making money off of buying and selling. I just hold my best places and sell of the rehabs and such.
Regards,
RichV(FL)
Buy/hold vs. Buy/sell - Posted by Graywolf
Posted by Graywolf on April 21, 2003 at 17:50:11:
Buy/hold vs. Buy/sell
This seems to be a topic of considerable conversation; I have received numerous calls and e-mails regarding this subject so I thought I would give my opinion on the subject. I have advised many of my clients that have asked this question to consider what they would like to accomplish in their real estate investing. My take on this is very simple. If you have all the cash and credit you are ever going to need in your life then sure, build a portfolio and receive the income from the properties that you bought or are holding in your portfolio. However, if you are just getting started and you buy a property and rent it out what will you do if the furnace goes out? You may not have the cash to fix it. I can?t help feeling that it would probably be best to acquire a property at a good discount, make some repairs, and sell it for a good return. If you are to repeat this process several times and accumulate a strong cash position, you would easily be able to afford any emergencies that may arise in owning a rental peace. I believe that if you buy real estate at the right price, finance it the right way, and sell it the right way, you will succeed.
Just thought I would share my way of thinking on this subject.
Best of luck in all your endeavors.
Graywolf
Re: Buy/hold vs. Buy/sell - Posted by Sean
Posted by Sean on April 22, 2003 at 20:53:07:
Buy and Hold is the path to true long term financial independence, buy and sell is a way to trade your current job for real estate. You may increase your income doing it, but you are no closer to stopping working than you were working for a paycheck.
Buy and sell is a good way to build up a nest egg, or make money on the side, or replace your current job with buying and selling.
If you desire to be sitting on the beach sipping cocktails in 5 years buying and selling won’t bring in those monthly residuals. Only HOLDING makes you independent… Flipping can make you wealthy, but you still have to get up and work every day.
Someone staring out, buying/selling is not a bad way to build up some equity to work with. its also not a bad path to do a little of both. If you buy and sell, keep a few of the really nice ones, forgo the cash payment today, for 100s of times that payment over the lifetime of the property.
Some people do both, buy/hold and buy/sell, buying the good deals and selling them to others, but keeping the absolute plums for themselves. So they get the current income, as long as the long term residuals.
Re: Buy/hold vs. Buy/sell - Posted by BobJ (Md)
Posted by BobJ (Md) on April 22, 2003 at 12:30:53:
I suggest that you don’t buy-and-hold until you can cover the unexpected problems that will arise. That means that you need some financial reserve to handle vacancies, plumbing problems, replacing dead appliances, or putting a new roof on the place.
A lot of people raise money by rehabbing. It’s not the easiest way to do things, but it can be profitable if you’re careful and learn what you’re doing.
Other people get started by flipping properties and bird-dogging for rehabbers and landlords. I don’t have much spare time to hunt for deals, so I’d gladly pay bird-dogs and flippers who bring me deals (eastern WV, west-central MD, and south-central PA: HINT, HINT!).
Your strategy should be based on your experience, time, and capabilities. You could get started by flipping to raise cash, plow the cash into rehabs to leverage it, and then sink the profits into buy-and-hold properties for long-term appreciation.
Robert Kiyosaki (Rich Dad, Poor Dad) defines wealth as the number of days you can live without a job. If you have a bunch of buy-and-hold rental properties that someone is managing for you, you can achieve wealth and never have to work again. That being said, although it sounds nice, it ain’t easy. You have to be smart, learn the business, and stay focused on your goals. It will take time.
My own strategy is to work a full-time job, do a few rehabs each year, and plow the profits into buy-and-hold properties. You might decide that you don’t have the experience to rehab nor the patience to deal with tenants, and might decide to flip properties and plow the profits into Treasury bills.
BobJ (Md)
Re: Buy/hold vs. Buy/sell - Posted by David Krulac
Posted by David Krulac on April 21, 2003 at 18:58:26:
there’s no law that says that you can’t do both, sell soem and keep some. John schaub says that he owns 20 rental houses now and his goal is to own 10 rental houses free and clear. There’s a good book called
“Buy and Hold” by David Schumacher, which is among the 40 books, mostly real estate that I reviewed on Amazon, the link is: