You don’t need a Yard Sign to tell you that the Buy-and-Hold Real Estate investment strategy is a fast way to acquire wealth in the United States.
Buy-and-Hold is a strategy based on buying a property with a small down payment, then leasing the property for a period of time to be determined by the owner. The investor is responsible for paying the mortgage, insurance, taxes, and repairs on the property. The investor benefits from tax advantages and income from the tenants. The real benefit for the investor is when the house increases in value over the years. For example, I have a client who bought a home in Montrose for $182,000 in 2002 with 20 percent down payment. The home sold for $345,000 in 2012. The home was leased for 10 years at a break even rate. There were no improvements made to this home. The owner made a 1,000 percent return on his money in 10 years.
With home prices and interest rates at record lows the market is ideal for the Buy-and-Hold strategy. The investor can make even more money by finding distressed properties which need repairs and remodeling. In inner-loop Houston for example, an investor could buy a run down two story home for $62,500. Spend $50,000 to $60,000 making repairs and lease it for $2,000 a month. Depending upon the scale of remodeling the home will have increased in value from $176,000 to $225,000.
The inventory of homes is shrinking. In Houston, July marks the 14th consecutive month of positive home sales, with housing inventory at a five-year low. Single-family home sales in July increased 27 percent compared to July 2011, according to data prepared by the Houston Association of REALTORS® (HAR). One of the principal factors in the demand for homes throughout greater Houston has been steady job gains that the Texas Workforce Commission reports has amounted to more than 90,000 hires over the past year. In its July economic outlook, the Greater Houston Partnership said ‘Houston is the strongest of all the major metro economies in the U.S., and if job growth continues at the current pace, this may be one of the best years on record for the region.’”
There are many choices on what to buy, for example:
Apartments
Multi-family homes
Single family homes
Duplexes
Distressed properties
Short sales
A skilled advisor such as Bill Edge can help you decide on the location, type of property, repairs, and best price. There will be times when you need to walk away from a home. Even the top pros shy away from buying a home with a badly cracked slab, or a hole in the roof which allowed the home to suffer water damage.
Rentals of single-family homes in Houston climbed 15 percent compared to July 2011 according to the Houston Association of Realtors. The average rent among single-family lease homes reached a new all-time high of $1,669 in July, up from $1,642 last month. The investor is also able to find more qualified tenants as the housing market tightens. No longer does the landlord have to accept the first application.
Ultimately your success will depend upon the skills and techniques you learn. Different areas of the country may require a totally different investment strategy. For Houston, Buy-and-Hold is the key to acquiring wealth.
If you have any questions, please contact us. We are your source of Houston, Texas real estate answers, whether for commercial, investment or residential..
Call Bill Edge at 713-240-2949 to see Houston Homes in 24 hours or less.
Source: Houston Association of Realtors