Should you hold a real estate property long-term?
For a savvy investor in residential or commercial real estate, it’s important to understand market cycles and the risks and returns associated with owning real property. Many investors who purchase single and multifamily residential properties believe that buying and holding the property is the key to success. It certainly can be for some, but for those with typical life changes, unexpected trans-formative life events and family transitions, a better way to wealth could be an annual reassessment of property inventory along with an examination of present returns and future values.
Many factors can drastically change the value of a property over the long-term: income tax restructuring, neighborhood decline, zoning changes, community development, economic change, and local government planning – to name a few. Assuming that a property will hold its value long term and continue to accelerate in rental income is probably not the best approach. An annual review with a real estate broker can target properties that may be in the danger zone and would be better sold and replaced with something else.
A well-versed real estate broker, active in community planning, is the best resource for the investor who wants to continually own and operate a financially stable and rewarding inventory of investment property. Depending on the type of leverage used to acquire properties, it is often best to reduce inventory when valuations max out or slow down and sell the properties on contract – resulting in a very healthy income over the short term and allowing for the repurchase of properties that are undervalued. Speculation in areas that are expected to change for the better should be constantly considered as an option, while elimination of portfolio properties in blighted areas must be a matter of focus throughout the entirety of ownership.
My background is based in creating on-going, tax-sheltered wealth for investors of all sizes and financial abilities. Reducing risk while maximizing profits is the key to success in rental ownership, as is the wise purchase and sale of properties. Understanding an investor’s personal goals is my method for strategizing the best way to obtain those goals. Constant relationships with clients assures that I am monitoring their overall inventory. I have the tools, knowledge and experience to see you through the long-term!