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Investing in a Five-Year Plan LONG-TERM BUY-AND-HOLD DOES NOT HAVE TO BE PERMANENT.
"I wanted to be a real estate investor, but it didn't make sense where I live. I was looking for a way to exit the unpredictable stock market and maximize my investments to build generational wealth. Memphis Investment Properties offered several opportunities to build a portfolio of investment properties in Memphis, TN. With low entry points and high rent to purchase ratios, Memphis has been a perennial market for real estate investors. Teaming up with Memphis Investment Properties gave me all the tools I needed to succeed.”
by Carole VanSickle Ellis
hen you think of long-term real estate investing, the odds are pretty good that you think about buying and holding physical property for a decade or more. Many investors have made their fortunes in this manner, purchasing rental properties and vaca- tion properties, paying the mortgages out of the rental income whenever possible, and then selling those prop- erties off decades later. The benefits to this type of buy-and-hold scenario are twofold: When you sell off a paid-off or nearly-paid-off property, you are going to walk away with cash, and it is unlike- ly (albeit not impossible) that you will not experience some degree of appreci- ation over that extended period of own- ership. Furthermore, many long-term W
investors using this strategy do enjoy cash-flow from their rental properties at least part (and often most) of the time during their ownership. However, this type of multi-de- cade investing is not the only option for the real estate investor interested in long-term returns. After all, con- sider that between 1985 and 2008, the National Association of Realtors (NAR) reported that the median tenure of a family in a home was just six years. Today, even with the decline of housing affordability in most markets keeping households in place for about nine years, that length of stay is still far less than the 10 or 20 years many investors assume qualifies as buy-and- hold investment strategy. Furthermore,
renters in single-family residences tend to stay in place only about three years, according to California-based Way- point Homes, although stays of five to six years are, the company reported, “not uncommon.” LONG-TERMINVESTING STRATEGYSHOULDREFLECT MARKETCONDITIONS When homeowners and renters make their moves in a marketplace, the marketplace shifts along with homeowner and renter preferences. Those marketplace shifts affect how you can best leverage your long-term investment, and whether the “long term” should look more like five or
36 | think realty magazine :: year end 2017
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