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Creating An Income Stream with the Buy & Hold Strategy

  • Writer: Spring Valley, The Investor's Bank
    Spring Valley, The Investor's Bank
  • 2 minutes ago
  • 3 min read


We are still riding the wave of a strong rental market, and the local demand continues to grow. In a December 2024 article our friends at the Cincinnati Business Courier reported, "Cincinnati will finish the year [2024] as one of the nation’s tightest rental markets, with an average of 11 renters competing for each vacant apartment – the most in Ohio – despite one of the strongest apartment construction booms outside the state of Florida, according to the surveying group RentCafe."


According to Zillow rental data, the typical monthly rent in Cincinnati is up 5.6% from November of 2023 and unit absorption continues to be positive amid increasing employment, population growth and changing lifestyles


Yardi Matrix data reports Cincinnati saw positive net absorption in 2024 of 3,857 apartment units, more than double the previous year’s absorption of 1,892 units, according to the Yardi Matrix data.


Rentals are up on a macro level as millennials, the largest generation in the U.S. and the generation holding the most purchasing power, feel less inclined or ill equipped to purchase a home. All of these factors culminate into an industry ripe with opportunity to earn an income stream by providing quality housing to the population.


Here is a high-level overview of the strategy that may get you thinking about becoming a landlord:


Advantages of the Buy & Hold Strategy

  • Semi passive to passive income

  • Property appreciation

  • Equity gain

  • Numerous tax benefits such as deductions, depreciation, deferment (1031 exchanges)

  • Hedge of protection during economic inflation


Disadvantages of the Buy & Hold Strategy

  • Ties up capital

  • Tenant issues

  • Time spent servicing the property -or- money spent paying a property manager

  • Can come with a high initial investment


How to Identify Properties for this Strategy

Properties with an income producing upside are qualifiers for long-term investment. More often than not, these properties need initial improvements to reach their full potential, hence why the BRRR method remains popular.


  • Properties in areas with strong rental demand

  • Property that cash flow after improvements (see our blog What You Need to Know About Rental Pro Formas for in depth detail)

  • Properties that meet an industry standard debt service coverage ratio (DSCR) will allow more borrowing opportunities

  • Multi-families that can be owner occupied will allow for broader borrowing opportunities


How the Buy & Hold Strategy Works

  • Acquire a property either below market value or a property with unrecognized rental potential

  • Improve the property to the point where rents can be maximized and meet the criteria of a positive cash flow analysis

  • Rent out the property to start collecting an income stream

  • Hold the property for the long-term allowing the assets to increase in value, your mortgage debt to decrease and your equity to grow


Why Choose Spring Valley for Your Buy & Hold Financing Solutions

We are a bank specializing in real estate lending. You get the security of a credible financial institution, the expertise of a small seasoned staff and the pride of supporting the local economy through community banking. We don't operate like corporate banks; we are designed for the investor offering:


  • Faster access to financing funds

  • Practical real estate and banking expertise

  • Banking experts that stay connected

  • Confidence of an established financially banking institution

  • An investment into your community by banking locally


To get started with the loan processes or learn more about our current products and rates:


Call 513-761-6688

Stop by for a visit M-F 9-5pm




 
 
 
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