Key Takeaways
- Lifecycle: acquisition, stabilization, operations, portfolio management.
- FHA house hacking is an excellent entry point.
- Due diligence is more extensive for decades-long holds.
- Multiple financing options suit different situations.
Executing buy-and-hold requires proficiency in acquisition, financing, tenant management, and ongoing operations.
Execution Lifecycle
Stage 1: Acquisition (months 1-2). Stage 2: Stabilization (months 2-4). Stage 3: Operations (ongoing). Stage 4: Portfolio Management (annual).
Financing Options
Conventional (6-7.5%, 20-25% down, 10 property limit), DSCR (7-9%, unlimited), FHA house hack (3.5% down, 2-4 units), Portfolio (bank relationship), Seller financing.
| Type | Down | Rate | Qualification | Best For |
|---|---|---|---|---|
| Conventional | 20-25% | 6-7.5% | Personal DTI | First 1-10 |
| DSCR | 20-25% | 7-9% | Property income | 11+ |
| FHA House Hack | 3.5% | 6-7% | Personal | First property (2-4 units) |
| Portfolio | 20-30% | 7-8.5% | Bank relationship | Unique situations |
| Seller Finance | Negotiable | Negotiable | Seller approval | Creative deals |
Financing options
Due Diligence
Physical inspection, financial verification (rent rolls, expenses), legal (title, zoning, licenses), and market (comps, vacancy, trajectory). More extensive than flip due diligence because holding period is decades.
Key Takeaways
- ✓Lifecycle: acquisition, stabilization, operations, portfolio management.
- ✓FHA house hacking is an excellent entry point.
- ✓Due diligence is more extensive for decades-long holds.
- ✓Multiple financing options suit different situations.
Sources
- TransUnion — Tenant Screening Best Practices(2025-01-15)
- NARPM — Property Management Industry Report(2025-01-15)
Common Mistakes to Avoid
Skipping professional tenant screening to save $30-$50
Consequence: One bad tenant costs $5,000-$20,000 in damages and eviction
Correction: Always run credit, background, income verification, and landlord references.
Reactive maintenance instead of preventive
Consequence: Small $200 repairs become $2,000-$5,000 emergencies
Correction: Implement seasonal maintenance checklists and annual inspections.
Test Your Knowledge
1.What is most important in buy-and-hold execution?
2.What screening criteria reduce tenant risk?
3.What percentage of gross rent funds maintenance reserves?