Little Known Facts About Real Estate Buy & Hold Strategy That Matter









If you watch a game, it’s fun. If you play it, it’s recreation. If you work at it, it’s golf.

Bob Hope


Posted by Colin Murphy on Jul 1, 2014 7:36:00 PM

During the boom times, I used to attend 15-20 property exhibitions per year. I can´t remember anybody at these shows advocating a buy and hold strategy. It was all about buying off plan and then selling for a big profit shortly after completion.

Many a taxi driver, publican and dinner party host could be heard advocating a “buy now before prices go even higher” approach.

In hindsight, that turned out to be a pretty risky way to try and make some money. It was also miles away from the traditional methods advocated by old hands.

I have a lot of sympathy for people who are suffering now because of investment decisions made near the top of a market. Ironically though, it was easier to make money purchasing real estate during the subsequent crisis even though many might instinctually preferred to wait until the opportunities had passed.

While I´m convinced that making a profit by buying real estate is both easier and safer than it was 8 years ago, it doesn´t happen quickly and it certainly doesn´t involve borrowing lots of money.

There´s no great secret here, the strategy couldn´t be simpler. Here goes: buy a discounted property with cash (no interest rate risk), in an established location, earn a nice income, treat your tenants well, and hold onto it for as long as you can. Consider selling only when the statistics and your gut tell you the market is showing signs of another property bubble.

I´ll be the first to admit that this isn´t an exciting plan, but you know what? It works. Very well. Just look at the table below. All I´ve done is illustrate the net income that can be earned from any half decent three bed condo in Florida. Apart from earning 150% of your purchase price, you still own a property outright with no mortgage that you bought for 50 cents on the dollar.

Before any of you young guns reading this dismiss such as strategy as unsuitable, consider what the great American economist Paul Samuelson said,

“investing should be more like watching paint dry or watching grass grow. If you want excitement, take $8,000 and go to Las Vegas”.   

It´s a numbers game
Let the numbers tell you when to buy and let the numbers tell you when to sell. I know a large bulk of our readers do this instinctually. A high rental yield with no gimmicks is one of the surest signs that a property is well priced.

The opposite is also true – a low rental yield probably means it´s overpriced. If you spot a combination of low rental yields and high capital appreciation – watch out, because you´re probably in the middle of a property bubble.

It´s a perfect storm (but the forecast says it´ll brighten up soon)
I´ve never seen conditions more perfect for buying real estate. In the areas we sell – prices are reduced by 50% compared to what they were 8 years ago – way below construction cost. Supply was extremely high, but it has been falling since 2011.

Recent figures from the Census Bureau and The Economist confirm that homeownership rates have decreased from 70% in 2004 to 64.8% today – that means more renters. In fact, there are more renters now there has been for almost 10 years. When the number of renters is increasing faster than the supply of properties, rents will increase.

Our Game Plan
A lot of business plans have been turned upside down over the past 5 years, but we´ve stuck to our guns by continuing to source well located, competitively priced and cash flow positive properties in areas where affluent locals like to work, live and play. That game plan isn´t going to change anytime soon.

I heard a good one the other day regarding financial advisors. A guy calls up a radio station and says  – “thanks to my financial advisor I now have a small fortune ….  mind you, I started off with a large fortune”.

Silly joke, but it rings true. What´s the point in complicating life when the opportunities are there to make money off your own bat?





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Walter Unger CCIM, CCSS, CCLS

I am a successful Commercial Investment Real Estate Broker in Arizona now for 20 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial landspecialist in Phoenix and a Landspecialist in Arizona.





we are at on the a rise of the cycle in Commercial Real Estate.  so there is only one way and it’s called we are going up and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix.  The prices on deals I may get you will not be around forever.


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