Tips For Buying a Rental Property

Buying rental property is a great investment right now.  Thousands of foreclosures have flooded the market and are dragging prices down, and the end is not in sight.  But where do you start?  It doesn’t have to be overwhelming if you break it down:

  • Get your financing in line first.  How’s your credit?  Trim down on that extra (unnecessary) spending and start planning for your first purchase!  Figure out what you can spend and how you’ll pay for the property.
  • Find your target neighborhood.  Before I bought my first rental property I drove several neighborhoods, none of which were further than 30 minutes from my house.  Drive through at all hours of the day, talk to homeowners . . . they will give you precious details about the area/residents.
  • Talk to other, seasoned investors who’ve been there, done that.  Join a landlord association.  Read books.  (Mine is a good one. Lol . . . but seriously, it offers tools, tips, techniques, forms, products and advice to simplify the process.)  In other words, don’t go into this blind.
  • Decide on multi- or single-family rental properties.  Multi-family will bring in more money but is more labor intensive.
  • Look at your personality, work life and home life — do you have the time, etc. to manage your own properties?  Not everyone is equipped to do this work.  Some people have time constraints that prevent them from doing it, others have personality constraints that make it difficult.
  • If you’re not going to do much of the work yourself, find honest, reliable subs before you buy.  You’ll want to hit the ground running as soon as you close on a property, so you’ll need to have your workers all lined up and ready to go.

There’s so much involved in buying rental properties, especially as a first time buyer.  But it’s fantastic for income and long term investment, and now is an excellent time to consider jumping in . . .

So prepare well, trust yourself, and go for it!

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3 thoughts on “Tips For Buying a Rental Property

  1. Hello Barb,
    I am just about finished reading your book. It is great! I have got a few laughs but learned a few lessons as well. 🙂 I really enjoy reading your blogs as well, very informative. I have a few questions about financing my first deal. I want to buy a single family home to start with. I have good credit so I am going to go through a bank, but how much do I realistically need to have set aside to get started? And what are the typical interest rates for rental properties?
    Alisha

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    • Hi Alisha,

      Just got back from AZ, visiting my kids for Christmas. Sorry for the delay in my response.

      Glad you’re enjoying the book and learning a few things as well … re: financing and getting started, you’ll probably have to put down 20% of the purchase price. As far as putting money aside, it all depends on how much the house will need in repairs. Carpet, paint, etc. Will you be doing any of it yourself? You can figure out what the materials will cost. From there on out, it’s sweat equity! Also, I’d have someone (have you secured any help?) go to the house with you before you buy it to give you an estimate on repair costs, so you’re not going in blind.
      Good luck … I’m excited for you! 2012 will be an adventure!

      Barb

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      • Hello Barb,
        Thanks for the response. I figured I would need 20% in this market. I have been working 2 jobs and paying all my ccards down and saving for my first deal. I just wanted to make sure I was on the right track. I don’t mind helping with repairs but I will have to find a good handy man/ contractor for the first few. I haven’t chosen one yet but I have a few in mind. I am very excited to get started though, I have been learning and watching other investors for a few years but I was a military wife so we moved every time I thought I was ready to make my first purchase. 2012 will be the year though. 🙂 I hope you had a great time in AZ for Christmas.
        Write to you again soon.
        Alisha

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