The hidden cost of buy-and-hold

Graham Stephan

Apr 13, 2026

I’ve been going back and forth on this for a while now. Every time I thought about writing this update, I held back for a little while. A voice in my head kept saying:

“Maybe I’m making a mistake… maybe I should just let things be.”

But at a certain point, when the costs start outweighing the benefits, you have to be honest with yourself. After years of building, managing, and advocating for the “Buy and Hold” lifestyle, I’ve reached a final conclusion: I am officially selling the rest of my real estate over the next few months and walking away.

This was never the plan. When I bought these properties, I genuinely thought I’d never let them go. I remember working as a young real estate agent and asking every wealthy buyer I met what they’d do differently if they could go back. Every single one said: “I wish I never sold. I should’ve just held.” For a decade, I followed that advice to the letter.

But the world has changed. The “Buy and Hold” mantra which has been a gold mine for as long as I can remember, has recently become a trap for anyone who values their time and mental bandwidth. There are some things that the numbers don’t capture and you need a different kind of math to make sense of it.

Before we dive into the math, do yourself a favor: Hit subscribe if it’s your first time here. You’ll get these weekly updates in your email, so that you can act on them fast. I get the satisfaction of helping you and 39,000 other investors.

Risk-free > Real-estate: When the numbers don’t tally

Most people picture a Los Angeles landlord as someone sitting on a million-dollar plot of land, collecting massive checks by the beach. The reality of my LA portfolio is far less glamorous. After you subtract:

property taxes,

maintenance,

repairs,

property management, and

city registration fees,

my total net cash flow works out to roughly 4 to 5 percent a year on the equity tied up in these properties. That return might have sounded great in 2019, but in the current 2026 economic environment, that return comes with a massive Mental Tax.

Meanwhile, Risk-free Treasuries, money market funds, and high-yield savings accounts currently pay in that same 4-5% range. With those assets, I am subject to zero restrictions, zero phone calls, and zero midnight emails about a leaking roof. Most importantly, I don’t have to deal with the City of Los Angeles telling me I need a $400 permit to replace a $500 fence. My frustration with LA has now become so consistent that it’s almost a meme – but trust me, it’s no fun living that meme.

In any other investment class, if the Risk-Free Rate equals your yield, the decision to sell is a mathematical no-brainer. The only reason people stick longer to real estate is because of the tangible feeling of holding something. The memories they create. While I do have great memories, I hit the point where keeping these properties was no longer a smart financial decision, it was purely an emotional one.

One lesson I’ve learned the hard way is that emotional decisions and investing are a recipe for disaster.

The Bureaucracy Gauntlet

My breaking point actually wasn’t a market crash. It was a sewer pipe.

In early 2025, I tried to do the one thing the city constantly says it wants: I tried to add more housing. I planned to take an old structure on one of my properties and convert it into a detached two-bedroom, 700-square-foot ADU. I estimated a $220,000 investment that would provide a clean, new home in a good neighborhood. It felt like a win for everyone.

Then the bureaucracy started.

First came the inconsistent inspections. One inspector failed us for a missing AC drain line. We fixed it immediately. A week later, a different inspector showed up and gave us a completely fresh list of items to fix that the first person never mentioned. According to my contractor, this is simply “how it works.” Each inspector has their own personal checklist, often contradicting the last one. We dealt with it.

The real prank happened during the final sign-off. The city demanded a $600 sewer line CCTV inspection. The camera found an issue deep under the street where my line connects to the city’s line. Despite the unit functioning perfectly, I was told it had to be fixed before anyone could move in. The quote was $22,000.

But it wasn’t the money that broke me: it was the 75-day notice. You see, The City of Los Angeles wouldn’t allow the sewer work to begin until I gave my existing tenants 75 days’ advance written notice that their water might be turned off for a few hours in the afternoon while the repair was done. These were tenants who worked during the day and wouldn’t even be home. Yet, no exemption was allowed, leading to 75 days of forced delay and lost income for a three-hour repair.

Finally, a third inspector showed up and told me I also had to replace 22 feet of sidewalk because the roots of a city-owned tree were causing an uneven surface. To fix the sidewalk, I needed a root-trimming permit from the urban forestry department, a process that took another three weeks of unanswered calls and voicemails.

This isn’t about one landlord’s frustration or a single bad experience. It’s about incentives, timelines, and whether the system actually encourages the outcome everyone says they want. There are hundreds of influencers out there calling real estate “passive income” and in very rare circumstances, it can be. But, when the environment is pushing capital away instead of inviting it in, where does that money go next, and what does that mean for the decisions I’m making right now?

The Pivot to Clarity

I’ve started calling these hurdles Background Noise. It’s not loud enough to stop your life entirely, but it’s always there, humming in the background, crowding out more important tasks and draining your creative energy.

Over the last two years, I’ve been on a mission to eliminate everything that doesn’t serve my focus. I shut down my coffee company and scaled back my production schedule because I value clarity more than anything.

So, what am I doing with the real estate? I’m not panic-selling. My properties are well-maintained and priced to move in a market that has softened over the last two years as inventory has finally started to climb. I’m patiently waiting for a good price, and I’ll be re-investing the proceeds into a mix of:

Tax-Free Municipal Bonds: Providing steady income without the hassle of midnight phone calls.

International Index Funds & the S&P 500: Leveraging the growth of the economy on auto-pilot without dealing with repairs and maintenance.

Bitcoin ETFs: Keeping a small, liquid exposure to the digital gold narrative.

This strategy recreates my rental income without the time constraints. The time and mental peace that it creates buys back my ability to wake up and focus 100% on the task that I’m currently focused on: Whether it’s taking The Iced Coffee Hour podcast from four monthly episodes to five, or building Index, a community of entrepreneurs where they can identify new opportunities and discuss ideas.

The Sunk Cost Fallacy

The hardest part of this was admitting that real estate was part of my identity. I was the guy who bought the worst house on the block and turned it into a bargain deal. I took real pride in that. But holding onto something just because it’s part of your story doesn’t mean it’s part of your future.

Psychologists call this the Sunk Cost Fallacy. It’s the tendency to continue an endeavor once an investment in money, effort, or time has been made, even if the current costs outweigh the benefits. I was a textbook case.

I’m not asking you to be impulsive. But if you’re an investor on the fence, run the numbers. But don’t just run the financial ones. Factor in the stress and the life cost. If the return doesn’t justify the headache, don’t be afraid to walk away. There is no shame or failure in this. Something that might have been a wise decision in the past might have turned into a burden, because the circumstances change. By adapting to the circumstances, you might be able to get the same results with a simpler setup.

Simplicity isn’t just a luxury. It’s the foundation of a happy life.

Recalculate your priorities every year. And as always, thanks for being part of this journey. If you found this useful, like it, hit the restack button, and share it with a friend who needs to re-evaluate their own priorities. They’ll thank you for it.

Share

I’ll see you next week. Take care in the meantime.

–– Graham

https://grahamstephan.substack.com/p/im-selling-everything

(http://www.autoadmit.com/thread.php?thread_id=5857303&forum_id=2...#49819382)