Buy and Hold Market vs Cash Flow Market

[Coty B Lunn]

The terms "buy and hold" and "cash flow" are often used in real estate to describe different investment strategies. Here's a breakdown of the key differences between a "buy and hold" real estate market and a "cash flow" real estate market:

1. Buy and Hold Real Estate Market:
   • Investment Strategy: The buy and hold strategy involves acquiring real estate with the intention of holding onto it for an extended period, regardless of short-term market fluctuations.
   • Focus on Appreciation: Investors following a buy and hold strategy typically anticipate that the property's value will appreciate over time. They may aim to benefit from long-term capital gains.
   • Rental Income as Secondary: While rental income is still a consideration in a buy and hold strategy, it might not be the primary focus. Investors are often more concerned with the property's overall appreciation potential.
   • Market Selection: Buy and hold investors might target markets with strong potential for property value appreciation over time, even if the immediate cash flow is not as high.
2. Cash Flow Real Estate Market:
   • Investment Strategy: The cash flow strategy prioritizes generating positive cash flow from rental income. Investors aim to have the rental income exceed the property's expenses, providing a steady stream of income.
   • Focus on Immediate Returns: Cash flow investors are more concerned with the property's ability to generate income in the short term. They may be less reliant on property appreciation for profit.
   • Market Selection: Cash flow real estate investors often target markets where the rental yield is high compared to property prices. This may lead them to choose areas with a strong demand for rental properties and a favorable rental market.

     Binghamton, NY - Considered as a cash flowing market, our properties tend not to appreciate as much as other areas or states, however the cash flow received from the properties is what many investors prefer.  Instead of the appreciation, you can make a return on your investment each year instead of waiting many years to sell for a large sum.

In summary, the primary distinction lies in the investment goals and time horizons. Buy and hold investors are typically more focused on long-term appreciation, while cash flow investors prioritize generating income in the short term. It's worth noting that these strategies are not mutually exclusive, and some investors may incorporate elements of both, depending on their financial goals and risk tolerance. Additionally, market conditions and property selection play crucial roles in the success of either strategy.