Buy and Hold – the tried and true strategy.
How do property investors build wealth over time? One of the most successful ways is ‘buy and hold’ investing where you buy a property, and hold it ‘forever’ letting the renters pay the mortgage and the capital gains build your equity.
After seeing some client portfolios with $20mn or more of equity, it has become clear to us that buying as property, undervalue if possible, and hanging onto it for decades, is a suburb strategy for creating wealth. If the properties you buy are in strong growth areas, or at least in safe zones like close to Auckland or important amenities like hospitals and schools, you just have to be patient and let the values grow.
We have seen some clients buy their property decades ago for $60,000 and now the property is worth over $2mn! Patience is a hard thing to contend with sometimes if you’re determined to build wealth through property faster, you might have to trade, flip, wholesale properties in conjunction with your buy and hold strategy. The numbers do show that for most people, avoiding having to pay tax when selling at a profit (bright line test), paying agent’s fees, and the lost capital gains between periods of ownership, all add up to extra stress and less wealth building.
Our tip is usually: buy at a discount, renovate, and revalue. Refinance out your deposit and keep buying as your income allows for it. If this is 1 house every 5years, you will still have 5 houses eventually. Stick to your day job because property investing is not as easy as some property coaches make it out.
However, if you have an unrelenting passion for property investment, commit to learning about the different strategies and use a platform of properties as equity for buying properties you intend to hold short term. If you would love to see what real estate options you have. Take the mortgage snapshot which automatically calculates your purchasing ability, potential mortgage savings, or ability to top-up your mortgage.