If you are just starting out investing in rental properties, I have broken down 8 tips on buying rentals as a beginner.
#1 – Figure Where You Want To Own Rental Property
Yes geographically where you want to invest in real estate as a beginner. Some people want the rental property nearby so they can check them out on a regular basis.
I recommend this if you are managing them yourself. Others do not care so as long it is the type of real estate they want, the numbers make sense and they are properly managed.
But if you are just starting out buying rental properties, invest close to where you live.
#2 – Is Investing In Rentals For You?
Determine if you want to be a landlord. We have sold many properties over the years where people just get fed up with being a landlord.
However, many times it is because they want to self manage. Which brings me to the next topic.
#3 – Who Will Manage Your Rental Properties
Determine who will be managing and leasing the property. If not you, then be sure to start interviewing real estate agents and property management companies.
Find out how long they have been doing it. And have them run numbers on prospective rental properties to get an idea of what they think the subject properties can lease for.
Also, be sure to find out what rates they charge and exactly what that includes.
If you are considering managing yourself, and you are just starting out, maybe you can go to work for a property management company part time to get a good idea of the process.
#4 – What Type Of Rental Property Are You Interested In Owning
Determine what type of investment you are seeking as a begining investing in rental properties. THere are many tyes including but not limited to Single Family, Condos, Commercial properties like strip centers or warehouses, MultiFamily like apartment complexes or mobile home parks Or maybe vacation rentals properties.
I suggest you seek out all the different types of real estate rentals out there, choose one and study everything you can about that type of investment.
If you do not own any real estate right now, I suggest you watch this video, Where you can buy your first house and live for free.
#5 –Preview Rental Property Immediately
Get out there and start looking rental properties. Even if you do not have the money or financing lined up, get out there and start looking. Sometimes creative opportunities arise and also if you find the right deal, money will not be a problem.
Getting out and looking at real estate keeps the momentum going. It gets the creative juices running and you will learn something new each time.
I recommend setting a disciplined weekly schedule in previewing and analyzing properties.
#6 – Know Your Rental Property Numbers
Especially as a beginning buying rental property you must know your numbers and practice. For every property you go out and preview, analyze each deal on the following:
- And analyze the rental market conservatively on how much the unit(s) shoudl rent for. If rented are they below market? Income / expenses.
- Analyze the sold comps in the market. Be sure you are not overpaying.
- What about Value Add. Do you have to put money into it which will increase rents? Are they current rented under market value? Opprtunity to increase rents? Can you add anythgin else to the property to increase cash flow?
#7 – Financing Your Rentals
Figure out how to get the deal funded. Can you do it on your own? Do you have down payment money and a bank lined up?
Check with local banks and see if they will fund a deal with a seller second. Do you have people who trust you and rely on your judgment who would invest in the rental property?
#8 – Managing Rental Property As A Beginner
If you are planning to manage your own rentals, it is imperative to have a marketing plan to get them leased as quickly as possible, choosing the right tenant, property screening per law with income verification, background and credit.
Again, get educated and go all in on finding the type of rental property that interests you and learn everything you can about them!