Buy and hold is the investment strategy that got us started in Real Estate. We purchased a home, made renovations to add value, then rented out the property. The photo is of our first investment property that we still rent out today. The best thing is that this strategy can go on indefinitely – a long term plan. But, this only works if you reinvest a portion of your monthly rental income back into the property.

What I am talking about is setting aside 2% of the purchase price per year towards maintenance and capital expenditures (like roof or AC replacement). For example, for a house that costs $100,000, you will set aside $2,000 per year towards these future expenses. And I recommend you open a new bank account to fund these expenses for two reasons: 1st because it will ease any worry that something catastrophic happens to the property, 2nd because when something does need to be replaced you will not have to take money from your personal account to pay towards your investment. Set up automatic transfer every month, so that when you receive your rent check, $2,000/12 = $166.66 will go into that fund.

Let your passive investment be passive! Of course it is an active process to buy a property with the intention to make it a rental. It takes significantly more energy than putting money into an index fund in your Roth IRA, but once you close on the property and hire a property manager – you have the power to make your investment truly passive. That is, to travel 364 days out of the year and on the 365th to check in and make sure everything flowing in the direction you intended…and that is the definition of passive.

My passion is to talk you through the tough decisions you need to make and provide you with the service that builds your trust to allow your investment to be passive. Call with questions about property management now!