Does Buy and Hold work?

When investing in an asset class, it is very important to determine your exit strategy before taking any action.  One school of thought is to buy an investment and hold onto to it forever.  This has been made popular by Warren Buffet.

In recent years, stock markets have become much more volatile than say 30 years ago and some have questioned whether this method still works today. I realize that there are two schools of thought here regarding stocks and will leave that for others to debate but I am here to present my thoughts regarding real estate.

If you are constantly flipping properties, you must keep doing it to maintain a cash position as there is no cash flow in flipping. Furthermore, there are commissions, taxes and other unforeseen expenses which can eat into one’s bottom line.

If however, you purchase a property in a strong market with a solid cash flow, this method is probably the simplest and effective way to preserve wealth. A rising tide lifts all boats and your risk is diminished.  It is by no means as appealing from an emotional perspective but it has undisputed bottom line results which are proven the world over!