Investment in real estate is a decision that should never be taken lightly. There are various strategies that investors can employ, and among these, the ‘Fix and Hold’ strategy stands out as an exceptionally rewarding one.
The ‘Fix and Hold’ strategy, as the name suggests, involves purchasing a property, making necessary repairs and renovations to increase its value, and then holding onto it for a significant period. This strategy allows the investor to reap the benefits of both capital gains and rental income over time.
Long-Term Appreciation
One of the biggest benefits of the ‘Fix and Hold’ strategy is the potential for long-term property appreciation. Real estate is a finite resource, and over time, property values tend to increase. By holding onto a property for a significant period, investors have the potential to see substantial increases in the property’s value, especially if the property is located in an area with high growth potential.
Steady Income Stream
Rental income is another great benefit of the ‘Fix and Hold’ strategy. Once the necessary repairs and renovations are done, the property can be rented out. This provides a steady income stream, which can be used to cover the mortgage payments and maintenance costs, with the surplus serving as a passive income.
Tax Benefits
Holding onto a property for the long term can also offer tax benefits. Depending on the local tax laws, investors may be able to deduct the cost of repairs, maintenance, and even depreciation from their taxable income. This can significantly reduce the tax burden, further enhancing the profitability of the investment.
Equity Build-Up
As you continue to pay down the mortgage on your property, you’ll steadily build up equity. This equity can be leveraged in a variety of ways, such as securing a home equity loan or line of credit, which can be used to finance additional properties, thereby expanding your real estate investment portfolio.
While the ‘Fix and Hold’ strategy requires patience and an initial investment towards repairs and renovations, the potential benefits — long-term appreciation, steady income, tax benefits, and equity build-up — make it a compelling strategy for real estate investment. It’s a strategy that lets you have your cake and eat it too — enjoying reliable rental income while awaiting potential capital gains.
However, it’s essential to conduct thorough research and due diligence before buying a property for fixing and holding. Consider factors such as the property’s location, the cost of repairs, the potential rental income, and the growth prospects of the area. Armed with this knowledge, you can make informed decisions that increase your chances of success in real estate investment. Contact Synergy Commercial Funding today to get the financing you need for your next property investment.
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