This can be one of the most exciting and scariest purchases you’ll probably ever make. Buying your first rental property can be like taking a leap off a cliff with a parachute you know little about operating. You know it’s there for safety and security, but the only thing you know how to do is pull the ripcord and pray it opens. The same feelings of anxiety, excitement, fear, and joy accommodate this type of purchase. You know it’s a smart investment and is generally reliable, but you’re not sure about what the journey will look like and how to make it all come together. Don’t panic. Just be sure to use the tips from this article to guide you along the way.
Before you even think about purchasing, you need a strategy. You need to decide what the end product will be or look like and then work backwards. For instance, you want to decide if you’re going to sell the property, rent it out, wholesale it, lease it, or trade it for another property. Each of these strategies has specific laws, so make sure you understand what you’re getting into before purchasing. Having a plan in place will help you stay on task and stay organized.
So, now you plan to purchase a property and rent it out. The next step is to decide how much money you’re willing to invest to bring the property up to your standards for tenants. Laws will vary from state to state and even from county to county, but make sure you set a budget to help you stay focused and keep you from going overboard with improvements. It’s a good idea to have a contractor go with you to view properties, as they will be able to give you a better idea of costs. Some contractors will give you a free consultation; so make sure you have the search narrowed down to one or two properties before asking someone to go with you.
Once you’ve established a budget, you want to begin your search of properties. This is probably the most time consuming and grueling part of the entire process, but it’s well worth it to be detailed and methodical in your search. Make a list of the areas you may want the property located. It’s recommended for new landlords to purchase something within an hour of your home or office you’ll be conducting business from. Add to the list the number of bedrooms, bathrooms, garage size, basement, and even yard size. All of these areas must be considered, because your prospective tenants will be looking at them and comparing them to others on the market. You can have a Realtor help you with this as well and perhaps he or she can give you some tips about desirable neighborhoods or amenities tenants are searching for in your area. Make sure you find a realtor that works with real estate investors. Furthermore, it would be very advantageous to find a realtor that has experience buying and renting properties themselves. Realtors with this kind of experience are far and few between, but will be your gems when looking for the right property.
You have your budget, list, and a realtor. Now, you’re finally ready to start viewing properties. Keep in mind you will probably see twenty, thirty, or maybe even forty properties before you find the one worth pursuing. Television makes this process extremely simple and quick so much so that anyone feels like they could do it. Yes, it is generally simple, but it does take quite a bit of time and energy, and therefore, requires a tenacious person willing to go through each property methodically. Don’t be surprised when you think you’ve finally found something that will work and then find it to have a serious issue that will blow your budget out of the water. Also, make sure you understand that you’ll probably work with two or three different agents because most will grow tired of taking you to property after property without you writing a single offer. That’s just the nature of the game.