To purchase a property with the intention of keeping it for the long term. This is in contrast to "
trading" or "flipping", which are strategies that involve buying and selling properties in a shorter timeframe.
There are a number of reasons why
investors might choose to hold a property for the long term. These include:
Capital growth: Over time, property prices tend to increase in value. This means that investors who hold onto properties for the long term can expect to make a profit when they sell.
Rental income: Properties can also generate rental income. This can provide investors with a regular stream of income, which can be used to offset the costs of owning a property, such as mortgage repayments, rates, and insurance.
Tax benefits: There are a number of tax benefits that can be associated with property investment. For example, investors can claim depreciation on the value of their property, and they may also be eligible for tax breaks on rental income.
The hold strategy is not without its risks. These include:
Interest rate risk: If interest rates rise, the cost of borrowing money to purchase a property also rises. This can make it more difficult for investors to afford to purchase properties, and it can also make it more difficult for investors to refinance their loans.
Property market risk: The value of property can fluctuate over time. This means that investors who hold onto properties for the long term could experience losses if the property market declines.
Tenant risk: There is always the risk that tenants will not pay their rent, or that they will damage the property. This can be a significant financial loss for investors.
Overall, the hold strategy is a long-term investment strategy that can be profitable for investors who are willing to take on the associated risks.