BUY AND HOLD DC

Let your investment grow.

Washington DC real estate appreciates well, so why not lease and wait to sell?

What is ‘Buy & Hold’?

What does the term mean?

‘Buy and hold’ investors purchase property that is likely to increase substantially in value over time. The investor rents the property to offset overhead and provide cash flow, and may leverage it in order to purchase additional properties.

Why Buy and Hold?

The Buy and Hold strategy allows investors to build a portfolio of properties focused on property appreciation, equity build, and cash flow. The investor profits in the short and long term and has the ability to tap equity for other investments.

Short term the investor offsets mortgage and expense, and ideally realizes a profit by renting the property.

  • Long term, the value of the asset appreciates, and the investor’s equity builds.
  • The asset’s equity can be leveraged to acquire new investment properties.
  • When the property’s value matures to equal or higher than the price paid, the investor can consider selling, or effect a 1031 exchange for another rental property.

This strategy works well with single family homes and multifamily properties purchased in desirable locations at the right price, and in good condition.

Financing Advantages

Virtually any financing type works for a ‘Buy and Hold’ investment strategy. The easiest is conversion, i.e. converting a primary residence to an investment property with financing already in place. Assuming you started your real estate journey with a 30 year fixed conventional loan, probably at a low interest rate, this is the ideal start, unless your first property is a condo.

Another outstanding financing option for ‘buy and hold’ properties is FHA: This government-backed mortgage loan requires only a 3.5% downpayment and FHA interest rates are traditionally lower than market rates. Do consider upfront fees and MIP. FHA allows borrowers to financing multifamily properties up to a fourplex if you live in one unit.

BRRRR is Buy & Hold strategy used to quickly scale portfolios. Read About BRRRR

What type of properties can I buy and hold in DC?

CONDOS | CO-OPS

Condos and cooperatives are risky candidates for buy & hold because the investor doesn’t have control over the majority of the property, condos realize lower appreciation than other property types, and rental rules can change.

If you do purchase a condo or co-op as a ‘buy and hold’ investment, you’ll need a BBL license and potentially a certificate of occupancy. Read the rules here.

SINGLE FAMILY

Single family homes are ideal ‘Buy and Hold’ investment properties, especially if thehome can be rented in multiple parts (large home shared by individuals as roommates, English basement rental, etc.). These properties can appreciate well, and generate considerable monthly cash flow if purchased in a desirable location, in good condition, at the right price.

Again, if you purchase a single family home as a ‘buy and hold’ investment, you’ll need a BBL license and potentially a certificate of occupancy. Read the rules here.

MULTIFAMILY

Multifamily dwellings can be excellent ‘Buy and Hold’ assets.

Look for 2 unit single family, duplex, triplex and fourplex properties in desirable locations, in good condition. Purchase price should ideally conform to the 1% rule.

Note that renovation costs for a multifamily property will be double to four times the cost of upgrades to a single unit. The same is true for maintenance.

You’ll need a BBL license and certificate of occupancy for each unit. Read the rules here.

Disclaimer

Our Investment content is posted for informational purposes only and should not be construed as investment, financial, legal, tax, or other specialized advice. We not financial advisors. Seek advice from professional legal, financial, taxation, or other experts before making investment decisions.

DC REAL ESTATE INVESTMENT

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