What is Buy and Hold

Buy and hold as the term itself suggests is a popular property investment strategy implying that an investor must purchase and property and hold on to it for the medium or long term. Such properties may not yield results immediately or in the short term in terms of appreciation in prices, but will gradually find an increase in their value. Such properties are ideal for long term investments since they can be bought at lower rates and sold after a few years at multiple times the buying price. It is one of the safest ways of building wealth over time.

Buy and hold strategy is used by property investors who build a portfolio of properties and making property into a business to reap higher returns over time. Property offers many benefits missing in other financial assets and is therefore being increasingly used as a lucrative investment option.

Buy and hold strategy fixes a long term goal, but the interim period need not be income free. Instead the property can be rented out and rent can bring in some income to supplement other income.

However, buy and hold works only for those who can afford to hold the property for many years. It cannot work for those who are hard pressed for cash, because holding on to property means incurring maintenance and other expenses.

Some properties qualify as buy and hold. But these must not be invested in if there is any likelihood of needing to sell them in the short term, since they may not yield any returns and finding buyers also may not be easy.

Many property investors do not opt for the buy and hold strategy since it takes money out of circulation and that amount limits buying other lucrative options which may also offer short term gains.

Buy and hold helps to overcome the upswings and downswings in property prices along the way in an upward sloping price curve, indicating a general increase in prices in the long term. This indicates that though prices may plunge in the short term, and pick up again, in the long run, they will move up provided buyers hold on it long enough.

Investors using the buy and hold strategy have the advantage of buying cheap when property prices are low and selling during an upswing even though it may take a long time, but since it reflects the investor’s mind set of not being in a hurry to sell, it pays off in terms of higher returns, which are often multiple times the price paid for acquiring the property.

The buy and hold strategy is the reverse of the popular flipping strategy used by many property investors. However, buy and hold strategy is widely acknowledged as the route to accumulating vast amounts of wealth and has been in the past. It balances the risk and returns that accrue on the property invested. It works for those who consider property investment to be a significant part of their investment portfolio.

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