The process of buying your first rental property is simple. However, it does not mean that it is easy, especially, for a new real estate investor. Therefore, this article is just what you need in order to learn what it takes to buy a rental property for the first time.
Of course, buying your first rental property is challenging. However, we are here to help you and guide you throughout the process. Therefore, here is what you need to consider before buying your first rental property as a beginner in real estate investing.
Related: 7 Strategies on How to Start Investing in Real Estate Right now
Buying your first rental property: Is investing in rental property your thing?
Before you get to the action, what you really need to think about is whether real estate investing is your thing. Think of what it means to you and why you are doing it. Also, think if you have what it takes to start investing in real estate in the first place. Then, you should think whether a rental property is what you want to do. Only after you have figured it out, you can go on with the rest of the procedure.
Related: Multi-family Real Estate Investing: Is This the Right Strategy for You?
Buying your first rental property: Check your finances
Finances are the number one concern of real estate investors. You can invest your own money if you have it. If not, then the real estate investing business offers a few options for investing in real estate with no money. Other than that, you can do research on mortgages available to you, just make sure you have the down payment required.
Buying your first rental property: Decide what type of rental property you are interested in
There are so many types of rental properties you can invest in. For instance, there are single-family homes which are considered safe for beginner investors. There are also multi-family homes as well as condos, studios, and apartment buildings. Think what suits you better. Are you ready to become a landlord of multiple tenants? Or do you want to start with one tenant? Check your finances: Can you afford to invest in an apartment building? Or do you think it is best to start with one housing unit and grow from there?
Buying your first rental property: Consider the location
Think of where you want to buy a rental property. Make sure it is in a good location with a good cap rate. Moreover, the type of the rental property can be a determining factor in the location. For example, if you are considering an investment in studio rentals, then you might want to buy a rental property near a college. If you want to invest in vacation rentals, then a vacation location is where you should buy an investment property.
For you, as a new real estate investor, we strongly suggest that you look for real estate properties within your local area. You should start by investing in a location near you until you have the right experience. You should only invest outside of your area when you are completely confident. Otherwise, it might get hard to manage and keep track of its operations.
Buying your first rental property: Set up a solid business plan
A business plan is a must. Otherwise, how are you supposed to know your next step? Set a business plan and make sure you have all your steps in detail. It’s going to help you stay focused. Moreover, it could help you define possible obstacles so that you can set alternative plans in case anything goes wrong. You should always have an exit strategy as well. This will save you the pain of any difficulties or losses in the future.
Related: Investment Management in Real Estate Investing
Buying your first rental property: Start looking for rental properties
There are plenty of sources where you can find a rental property for sale. Look in the newspapers, ask around, and look up some options online. For this purpose, you can use Mashvisor or any other real estate investing website. Just make sure to double check on the website itself.
Buying your first rental property: Do proper math
Proper math is a requirement for every real estate investor. For you, as a beginner real estate investor, it is a part of your real estate education. Real estate math includes calculating return on investment, cap rate, cash flow, and cash on cash return. Also, you will have to learn to perform a real estate market analysis which deals with the value of your investment property compared to others.
Buying your first rental property: Work with a real estate agent
For a new real estate investor, this is a must. Real estate agents are people with great experience. They can guide you along the way. Besides, they are experts when it comes to finding the perfect real estate property that will suit your investment goals. Therefore, you should not, in any case, underestimate the importance of working with an agent.
If you want to learn about finding a real estate agent, then you should check out our blog “How to Find a Real Estate Agent Near Me?“. Besides this blog, we have more on real estate agents that you can benefit from. So, make sure you check out our blogs.
Buying your first rental property: Inspect the property
You cannot just look at a brochure or an ad and decide that you want that real estate property. Visit the property in person and do a proper inspection of the property. This is part of the investment property analysis. Check out the size of square footage, look for any damages, and of course check out the facilities available.
Buying your first rental property: Start small
There is nothing wrong with starting small in real estate investing. You are a beginner real estate investor, and you are not expected to start your business with a million-dollar-worth property! Look for affordable yet on-demand investment properties. Starting small does not mean that you have to stay small. You can always grow your business once you feel comfortable with it. Besides, you do not have to worry about experience. Experience comes along the way, and that is exactly why you need to start small.
Buying your first rental property: Use Mashvisor for finding and buying your first rental property
Mashvisor is a tool that you can use to find your first rental property. We provide you with a huge platform for rental properties for sale. So, sign up and start looking for the best rental property in your local area.