Buy and Hold properties are properties that can be turned into a cash flowing, rental income producing properties. These are great properties for investors who are looking to build real estate wealth.
Buy and Hold properties are the most overlooked type of deals because there hasn't been a scientific way of locating and analyzing and find the best deals in the entire market. It is very time consuming to analyze properties based on both sold comps and rental comps, and most investors would normally opt to look at a few properties and settle for the best one out of the few.
With MLS Deal Finder, you can find the BEST buy and hold property in any neighborhood by using our proprietary metric: Rental Index. With Rental Index, you can now the market for properties that can generate the best cash flow.
Rental Index is a perfect way to search for properties for the buy and hold strategy.
Purchasing a buy and hold property requires a thorough analysis of future rental income compared to the cost of owning that property. In general, property owners want to create a cash flow greater than the costs.
For example, let's say an investor is looking to purchase a home priced at $150K, with the goal of renting the home out for income. In this example, if the investor borrows $150K, the 1% rule of thumb says that the home will need to be rented for at least $1,500 per month (1% of $150K) to be a good income property. The formula below illustrate the 1% rule.
Similar to the 1% rule, Rental Index allows us to search for good buy and hold properties based on the Estimated Monthly Rental Income and the Listing Price.
A Rental Index of greater than 1.0 means a property can create cash flow to cover all monthly expenses of owning the property, with $0 down payment.
Every buyer has his/her own Rental Index
Generally speaking, a buyer usually puts 20% down payment when purchasing a property, so a Rental Index of 0.8 or greater can be a good buy and hold property for that buyer. On the other hand, if a buyer has to borrow a loan with a very high interest rate, he may need a property of Rental Index of 1.1 or greater.
The bottom line: Rental Index is a metric to help you to decide whether a property can be good for buy and hold. The higher the Rental Index, the more positive cash flow the property can generate.
Location: Grand Prairie, TX
List Price: $59K
MLS Deal Finder Estimated Rent: $1,404
MLS Deal Finder Rental Index: 2.38
This buy and hold opportunity is located at Grand Prairie. Priced at $37/sqft, this property is hugely discounted from the 4 sold comps we found in the same subdivision, which have an average sold price of $68/sqft.
In addition, based on the rental comps in the same subdivision, MLS Deal Finder estimated monthly rental value is $1,404 with minimal updated needed, yielding a whopping Rental Index of 2.38. This is a fantastic income opportunity for buy-and-hold investors.
Location: Fort Worth, TX
List Price: $85K
MLS Deal Finder Estimated Rent: $1,099
MLS Deal Finder Rental Index: 1.29
This property has an estimated rental price is $1,099 in month, an attractive opportunity for a buy-and-hold investor.
Location: Lewisville, TX
List Price: $133K
MLS Deal Finder Estimated Rent: $1,467
MLS Deal Finder Rental Index: 1.10
A Rental Index of 1.1 makes this a very good find for investors looking for buy and hold deals in Lewisville.
Ready to start hunting for Buy and Hold Properties? With MLS Deal Finder, you get so much more. On any given day MLS Deal Finder finds investment properties as soon as they are listed: Buy and hold deals, Foreclosure Listings, Short Sales, Fixer Upper Houses, Sold As Is, REO Properties, Bank Owned Homes, and HUD homes.
In addition to houses sold by motivated sellers, we also find deals in estate sales, transitional neighborhoods, or simply houses that needs cosmetic upgrades. As long as the house is under market value, our proprietary technology will find it within seconds, and you will receive a real-time, detailed analytics report on each deal.
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