How many times have you heard or read from experts that in order to win in the property investment game, you have to adopt the buy-and-hold strategy? And how many of you are turned off by it as you know that buying and holding just one or two properties in your lifetime just isn’t going to give you your multimillion dollar retirement nest?
I personally challenged this belief some years back and have come to reap the benefits of it. Buying and selling has its advantages. The most obvious one is the fact that it allows you to accelerate the build-up of your seed capital. When I first started investing, I put just 10% down payment on an apartment (approximately 3k) and walked away with close to 50k net profit two years and four months down the road. I then used that same profit as a 10% down payment and today this property will give me close to 600k net profit if I were to sell it off as I write.
Since I bought 2 apartments at the same time and adopted the same policy, I now have grown my original seed money of 6k to close to 1,000k in less than 5 years. There is no way I would have been able to create this amount of liquidity had I adopted the buy-and-hold strategy advocated by so many market experts. Some might label me a speculator and thus frowned upon as a contributor to Best Marana AZ Realtor property bubbles or artificial price hikes, but like the saying goes – each man for himself. Not to sound snobbish, but at the end of the day its market forces that rule the game. Not you. Not me.
This strategy can be adopted successfully if you do your research thoroughly, know your macro and micro outlook of the location/market you are investing into and most of all always have your exit strategy ready. Some of you might say that the price of property rising is inevitable as inflation is hiking as well. I accept that this is a reality of the world today. However, you cannot dispute that the liquidity you have created from a successful buy-and-sell strategy can open new doors to you.
For me, I implemented the buy-and-sell property strategy to build sufficient seed money before I ventured into a buy-refurbish-sell strategy (I’ve started to incorporate this strategy). Along my journey, I will select some properties and convert them to a longer term buy-and-hold portfolio. Make no mistake, I do not believe or advocate that you keep any one property for 20 years or so. Buildings depreciate and townships or locations that are ideal today might not still be so in the future. As such, make sure to review and revisit your investment(s) if you opt for a buy-and-hold approach.
Finally, take the time to learn the different approaches and decide for yourself what works best for you. Most importantly, make sure that you can afford to sustain your lifestyle if things do not turn out the way you imagine. By that, I simply mean do not live beyond your circumstance thinking this strategy will suddenly be your cash cow a year or two down the road. Focus on your goals, aka your whys, and do not be swayed by instant gratification. Be smart and change your investment style when the time is right. When that is, only you can decide.
