Does it even make sense to Buy and Hold anymore?

Happy Thursday everyone!

First off I wanted to say thanks of you that read my first post and stayed with me!

Over 35% of the folks that received the first one opened it, and less than 1% of people that received it unsubscribed so I guess that means something 😅 

For today I wanted to bring up something I have been thinking of more and more as I continue to work with people in our SCALE community and I continue to get involved in various FB groups and other communities and that is this concept of Financial Freedom via Rental Cashflow.

Constantly I am seeing excited newbies coming in, fresh off whatever podcast, youtuber, or instagram account they follow who boldly state that they plan to “replace their W2 with cash flowing properties in the next 5 years” or some version of that.

I see these, and cant help but be filled with a hint of sadness because I cant help but feel these are now, more than ever, pursuing a goal that may literally be impossible with the current economic environment.

Back when I started buying back in 2018 everyone was already saying

 “Its too late! Deals don’t make sense!” 

The truth was though, people just didnt know how to find deals yet, and if you found discounted properties you could EASILY make things work especially with rent to price ratios being so favorable.

NOW with the current state of things it TRULY feels impossible.

We are facing:

• property prices being DOUBLE or more of what they were back then

• interest rates, increased proeprty taxes, and soaring insurance making monthly payments 3 or 4 times what they were back then

• a renter population becoming less and less able to ACTUALLY pay “market rent” without faking paystubs or lying

• Increased legislation across the country that is anti landlord

The solutions investors are choosing to chase yield consist of things like Short term rentals, rent by the room, recovery homes, senior living ect… things that make sense NOW, but fundamentally are a business and also have limited populations of “customers” (aka tenants) to actually use the properties as the investors intend to use them..

All this leaves me wondering:

Does it actually make sense to Buy and Hold real estate anymore?

I think if you already own stuff that has 30 year fixed low debt payments, sure you do you booboo.

But is it possible to make sense of new acquisitions that arent bought via favorable seller financing or some other creative structure?

If we are being brutally honest probably not.

I think there will always be room for the transactional side of the business.

Wholesaling, Flipping, Building/Land development, none of that demand will go away, if anything itll grow as more and more people reach their financial limit.

But when it comes to having a goal to receive “passive cashflow” to achieve financial freedom, I unfortunately think that may be the way of the dodo bird and soon become something people hear about as a long lost myth, not something you can actually practice.

Whatre your thoughts?

Reply to me here or hit me up on instagram @mike_invests

Thanks for checking out my ramblings.

-Mike