🏠 What is Buy and Hold (Rental Income) in Real Estate?

Buy and Hold is a real estate investment strategy where an investor purchases a property and retains ownership for the long term, generating income primarily through rent payments and benefiting from property appreciation over time.

📌 When and Why It’s Used in Real Estate

Buy and hold is typically used by investors seeking long-term passive income and wealth accumulation. It’s popular in stable markets where rental demand remains high, and investors aim to leverage cash flow, tax benefits, and equity growth.

This strategy is especially useful for building a real estate portfolio that grows in value and income over years or decades.

🧮 How It’s Calculated or Applied

To analyze a buy and hold investment, investors often calculate cash flow:

Monthly Cash Flow = Rental Income – (Mortgage + Operating Expenses)

Where:

• Rental Income is gross monthly rent
  
• Operating Expenses include property taxes, insurance, repairs, property management, etc.
  

Mortgage is the monthly loan payment (principal + interest)

✅ Pros

• Generates consistent, passive income
  
• Long-term appreciation builds equity
  
• Tax benefits like depreciation and deductions
  
• Can be financed with leverage for higher ROI
  

⚠️ Cons

• Requires active property management or hiring help
  
• Exposure to tenant risk and vacancies
  
• Market shifts can impact rents or property value
  

Illiquid compared to stocks or REITs