Real Estate Investor Magazine South Africa August 2018 | Page 48

What is Buy and
Hold Investing?
BY RJ PALANO
R
eal estate investing Buy and Hold is the process of
buying or acquiring a property with the short-term
aim of renting it out and then maybe selling it in the
future. Whenever we discuss real estate investment option
over any other investment options like stocks of 401k (retire-
ment products), the most important benefits which we notice
and talk about are the Rents and Tax deductions. It is exactly
what this process of Buy and Hold Investing implies.
This process is very advantageous for people who are look-
ing for long-term gains. Some of the benefits which we ac-
quire from this are Rental Income, Tax Deduction, Rise in
the price of the property while we plan on selling it. When-
ever we buy a property, we can rent out that property and
enjoy the rental income from it. The depreciation that we face
because of the properties damage helps us to get tax deduc-
tions and eventually if we take care of certain factors that we
will discuss in the later part of this article, the price of the
property also goes up thereby helping us to earn profits when
we finally decide on selling that property.
Do you notice how it is all a cycle? From buying the prop-
erty to finally selling it after a long interval. All the financial
gains in between are profits for us.
While we enjoy the gains or benefits from this process of
Real Estate Investing buy and hold, some factors which make
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AUGUST/SEPTEMBER 2018 SA Real Estate Investor Magazine
it a success and which we should keep in mind while we buy
a property are the following:
A Good Neighbourhood – By this what we mean to say
is choose the area where you buy the property wisely. Ensure
that it is a residential posh area or at least a space which is
worth living in with good people already staying there
An area where rates are going to rise – Also ensure that
you do your own due diligence and market study before you
buy a property. Always make sure that the rates in the area
where you buy the property, the rates are going to increase
in the future.
Type of property – the type of property that you buy also
matters. Whether it is a multi-storey building, single family
or multi-unit property,etc. all these factors add to the ulti-
mate rental amount of the property and eventually your fi-
nancial gains.
Also the opposite of buy and hold which is Buy and Sell
is gaining some popularity. This process is, however, better
for investors who are looking to earn quick profits. In this,
the investor buys the property and then sells it after making
some changes or doing some renovations.
Eventually, no matter what you do. Real esta