Tips for Getting Your First Rental Property
Thinking of getting started in real estate investing?
Real estate investing in all its forms has one goal – to increase income and wealth. There are a lot of benefits to investing in single-family residential (SFR) rental properties. Rental properties offer cash flow every month along with long-term benefits of increasing equity and appreciation.
Here are some tips to get your started.
First and foremost is assessing your finances. You need to know where you stand financially. Since most first-time investors can’t afford to pay cash, you’ll want to check if you qualify for a loan and how much. How much can you afford for a down payment? Also it’s vital to know your credit score. To secure a loan with a low interest rate, a good credit score and the ability to make a down payment will help.
Talk to a lender to find all this out before you go house hunting.
Create a Plan for Investing
Once you decide to invest in SFR rentals, figure out your investment criteria. What type of returns are you looking to generate? What minimal monthly cash flow are you looking for? How much repair work are you willing to do? How much can you afford to spend?
You don’t have to rush and get 10 properties in two years. Many investors start out slowly and get 1 property per year and grow from there as they get more experience. Consider buying a duplex, living in one unit and renting out the other. It’s a pretty safe way to gain experience and see if being a landlord is for you.
Determine the Right Area
Location is everything in real estate especially when you’re starting out. Usually the closer a rental property is to your current home, the better. It’ll make it easier for you to show the property to prospective tenants, make repairs when needed and in general keep tabs on the property.
You also want to identify an area where property values and rents are stable or preferably, increasing.
Find the Right Property
When it comes to identifying the right property for your first purchase, be patient! Seasoned investors often look at many properties before buying the one that meets their criteria. A lot of properties won’t.
Looking at a lot of properties will also force you to practice running the numbers to see if a property meets your investment criteria. You want to get really good at this to avoid mistakes and to quickly assess properties.
Plan your Management
Are you ready to be a landlord? It’s a great experience on your first deal, so you learn what’s involved. It can be a lot of work though, if you’re not an organized person. So, you may consider hiring a property manager right from the start or as your portfolio of rentals grows.
While there’s a lot involved in getting started, there are shortcuts you can take so you don’t have to learn it all the hard way. Get involved with local real estate investment organizations and/or find some online. A lot of experienced investors are willing to share there knowledge, which can save you a lot of time and headaches!
6 thoughts on “Tips for Getting Your First Rental Property”
A must read article which highlights why its important to plan before renting home or apartment at your desired location.
I appreciate the information given in this article about the factors which should be taken into consideration while purchasing a rental property. Buying rental property is considered as one of the stable sources of income. But, without a proper strategy, it could become the worst nightmare for an investor. So, an investor should be cautious while investing in the rental property. The real estate market condition of a particular location should be taken into consideration prior to making any major investments.
I liked that you mentioned the closest your rental property is of your home, the better. My mother is thinking about renting out one of her properties, and we are looking for information. I will recommend her to rent out the one that is closest to her home.
You made a good point that you know where you stand financially before buying into residential real estate. I’ve been wanting to invest in real estate to rent out some property. Maybe I should speak to a real estate agent and see what they can do for me.
I’m planning to buy a residential home, which I intend to rent out, that’s why I’m currently looking for a property management service that can help me. I guess you’re right since not all of the investors have enough cash, I’d make sure to figure out investment criteria. I’ll also keep in mind to identify the right property for my first purchase, probably by checking its location as well.
It’s good to be reminded that I need to be patient if I were to purchase my first rental property. I’m thinking of investing in apartments that can be accessible to students in a nearby university but I still feel inadequate and I’m not sure if I’m fit to be a landlord. Maybe I should consult an expert in property management first before making any decision.