Long-Term Real Estate Investing

One can make fast money with quickly flipped deals in real estate, but often you can earn even more money if you are willing to wait a few years to cash in on your earnings. Generally speaking, the longer you hold onto real estate, the more it appreciates in value. This is not the case with every property, and the cycles that real estate goes through can mean that some years will show no financial gains. However, in most cases, real estate values increase over time. This is a good reason to hang onto some properties for at least a few years before selling them. A medium time range may be five years. This gives a property time to increase in value with the appreciation rate and gives you time to boost its value through better management and improvements.

Investors who concentrate only on quick flip opportunities don't tie up their money for very long when things go as planned. Keeping a property for several years, however, means that your money may not be available for quite a while. But it's possible that if you buy the right building and make the right moves, you can borrow money against your equity in the building to keep your cash liquid.

Making a commitment to hold onto a building for several years is a big decision. If you buy property that has no quick flipping potential because you plan to keep the building long enough for it to grow in value, you must be prepared for the wait. The years might pass swiftly if you get a nice property that presents few problems during your ownership. By the same token, you could wind up with a building that needs frequent financial and personal attention. If you get a troublesome building years of ownership can be unpleasant. For this reason, investigate thoroughly before you buy a building you intend to keep for several years.

Properties suitable to own for up to ten years are midterm keepers. This means the properties have good potential for awhile, but they don't have the means to carry you through retirement or add to your portfolio on a long-term basis. The factors used to determine a building's potential investment life vary. In some cases, the deciding factor is the condition of the building. Maybe the mechanical systems have only a year or two left in them before they will need replacement. Another factor might be status of the neighborhood. If a building's location is peaking, the property's value may decline in later years. On the other hand, if the building is in an area of growth and revitalization, the property could increase in value for many years.