Buy and Hold-Milwaukee

[Teresa Machi]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Bay View.

Buy and Holds are the easiest form of REI! Here is EXACTLY what we do. Buy in decent areas of MKE, make the units very nice to attract quality tenants and have a very low-maintenance investment. Here's a quick example of one we bought in Bay View-it added a ton of counter space and a dishwasher to make our tenants happy and comfortable.

[Marcus Auerbach]

Welcome back from your trip @Teresa Machi!

Here is a thought I'd like to add for your question @Tom Shallcross

One of the most profound and basic formulas to consider in for a buy and hold investor are the three sources of income:

#1. Cash Flow

#2. Equity/Principal

#3. Appreciation (forced/organic)

(Note: If you read old REI books they list #4. Tax shelter for active income, but that's long gone since the 80's I believe - so we have 3 left.)

While everyone seems to focus on #1 Cash Flow these days, it is usually the smallest of the three. While it is always a basic requirement for a sound investment, it's usually small numbers that will not generate real wealth. Real wealth is created by #2 and #3. 

Shifting you financial model towards cash flow will usually result  in lower returns of #2 and #3. Most investments are somewhere in between. If you want to shift the needle a little bit more to one side or the other depends on where you are in your career: typically you will focus on Cash Flow early and the slowly migrate towards wealth gain later, when cash flow becomes less important.

I recommend to test this out for yourself and play a bit with the BP calculators and then give it some thought to what mix would be best for your personal situation.