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Long term property investors like to buy investment properties and hold on to them as long as the can, even passing them down into a next generation. They maintain the property the best they can keeping a positive return on their investment. These investors also get the benefit of appreciation as time goes on. It is extremely rare for real estate to go down in value, it almost always goes up in value. Cash flow is king with value real estate investors.
These investors can get a little lower capital gains tax when they finally decide to sell the property. Some buy and hold investors choose no to us the 1031 exchange either.
Short term real estate investors are generally those that flip houses for profit so they don’t get the tax benefits that long term investors do. Generally short term investors don’t have as much leverage with their properties, they are using more of their own money. They also don’t get the benefit of appreciation to increase the value of their properties. They make profits based on the immediate improvements they make to the property. This investor would have to buy more properties and sell them quicker, at a profit, to make the money in the consistent manner the long term investor would. When you are flipping houses for a profit this is what you are doing. Buying low, making a few improvements, and selling at a profit. Real estate investors that flip houses have to make sure that they are making enough profit to cover their expenses as well as the taxes they will have pay on the sale of the property.
