Did you promise yourself that 2019 was going to be the year you finally become a real estate investor and secure your financial future? Starting with a single investment property this year is one way to go about it, sure. In fact, you might not have even imagined that buying multiple investment properties in a single year was possible.
Too ambitious, right?
Well, 2019 is the year to be ambitious. It’s the year to learn how to buy multiple rental properties and finally take that first step towards being able to quit your 9-5 job and achieving what everyone dreams of- passive income.
It sounds like I’m blowing smoke and simply trying to hype you up for something that isn’t possible. But, when I say “multiple rental properties” I don’t mean 100. You won’t have that millionaire’s real estate investment portfolio by December. What you can have is 3 or maybe even 4 rental properties making you money. So, if you’re ready to find out how to buy multiple rental properties, let’s get into it.
Step #1: Financing Multiple Investment Properties
This is where a beginner real estate investor might put the brakes on the plan to buy multiple rental properties in one year. Where do you get the money to finance this kind of real estate investment strategy? You probably don’t have hundreds of thousands of dollars saved up so you will need to borrow it.
Work with a Mortgage Broker
This is where a mortgage broker becomes an essential part of your real estate team. A broker will inform you of your different investment property financing options based on how much you have saved up for a down payment as well as your credit score and other key requirements of getting approved for multiple mortgage loans. Besides the invaluable information a mortgage broker can provide you on how to buy multiple rental properties using loans, this professional will help you find the right mortgage lenders. After all, not every mortgage lender is willing to financing multiple properties. But your mortgage broker will find one who is.
Insist on Pursuing Your Investment Property Financing Options on Your Own?
Even though the best move is to work with a broker, you might be so ambitious that you want to seek out the investment property financing on your own. If so, the best advice I can offer you here is to not let one or two “Nos” bring you down. You’re a beginner real estate investor and some mortgage lenders may not be ready to get behind you. So it may take some time to find one who will. Your best bet is to look for a portfolio lender. These lenders actually prefer to finance more than one real estate investment at once.
Start Saving Up If You Haven’t Already
Ideally, since you’re now seriously looking into how to buy multiple rental properties in one year, you’ll have at least some cash saved up. It won’t have to be $800,000 or even $400,000 for 4 rental properties as you’ll be looking for a mortgage. Still, you’ll need to have cash saved up for the down payment for investment property, closing costs, appraisals, mortgage broker fees, and even an agent’s commission (if you choose to work with a real estate agent).
This is where a mortgage broker comes in handy again. They will scour the market to find you the best investment property mortgage rates and try to get you the minimum down payment. Even then, your own money-saving skills will have to be honed here. This is where your plan to buy multiple rental properties in 2019 might be changed. It will take some time to save up this cash. In the meantime, work on that credit score, continue learning how to buy multiple rental properties, and know that you can do this in a single year. It just might have to be done in 2020 or 2021 but you will get there once you have the cash investment saved up!
Need help saving up money to become a real estate investor this year? Read The Guide to Saving Money to Buy Investment Property.
Step #2: Finding Multiple Rental Properties
So let’s say you have all that cash saved up and are ready to move onto the next step of how to buy multiple rental properties: the investment property search. What you’ll quickly find is that it can’t be done quickly. It takes the average real estate investor 3 months just to find a potential investment property. Tack on the time it takes for investment property analysis, real estate market analysis, getting a hold of the seller, performing the property inspection, negotiating, closing, and then getting the property ready to rent out…that’s a lot of time. At the average rate, you may buy one investment property every year. But that’s not what you’re looking for.
The idea of cutting down on time when investing in real estate sounds scary and maybe even stupid. You shouldn’t rush because you will make mistakes. But I’m not suggesting you rush as a way for how to buy multiple rental properties in a single year. What I am suggesting is that you go about your investment property search in a smart, fast, and easy way. That’s by using real estate investment tools.
Use an Online Property Finder Tool
Mashvisor’s Property Finder, to be specific, is a real estate investment tool that will allow you to find investment properties in a matter of minutes. Not just any investment properties, but ones with the highest return on investment in the real estate markets where you’re looking. This is exactly what you need for how to buy multiple rental properties in one year.
So, how does it work? First, select up to five real estate markets where you want to buy rental properties. This is a great feature of the Property Finder especially when it comes to the idea of buying multiple investment properties. Not only will it save you a ton of time when it comes to your property search but it will help you spread the risk of real estate investing across multiple markets.
From there, you’ll be given the investment properties with the highest cash on cash return in those housing markets:
Next, a real estate investor can set a few key filters. This will help to narrow down the list of investment properties to those that match your unique criteria. These property filters include:
- Rental Strategy (Traditional or Airbnb)
- Type of Investment Property (Single-family residential, multi-family, condo/coop, etc.)
- Number of Bedrooms/Bathrooms
Once you’ve done that, you’ll be looking at some of the best real estate investments of 2019. And you’ll have found them all in one place. Within minutes, you went from wondering how to buy multiple rental properties in 2019 to actually staring at a few great options.
Step # 3: Analyzing Each and Every Investment Property
The Property Finder Tool has shown you a few of the best investment properties. Do you jump right in and buy them to keep moving forward on your plan to buy multiple properties this year? No, slow down. You need to analyze each and every one of them. Again, you want to cut down on time where you can to be able to pull this off, but you don’t want to cut corners and end up with a negative cash flow property.
What you’ll need to do here again is, you guessed it, use real estate investment tools. The Property Finder can show you properties with high cash on cash return, but you’ll need an interactive rental property calculator to be able to make sure that with your unique mortgage and interest rates, you’ll end up with a bunch of positive cash flow properties.
Where can you find an interactive rental property calculator? Once you see an investment property you like on the Property Finder, simply give it a click. You’ll be taken to the Property Analysis Page for that real estate listing.
It will have a mortgage calculator that allows you to adjust your down payment, interest rate, etc. As you do this, you’ll get to see how it affects your cash on cash return for that specific property. The calculator will also show you the rental income, cap rate, occupancy rate, and allow you to adjust the expenses to ensure you’re looking at a positive cash flow property.
That takes care of investment property analysis. But what about real estate market analysis? Setting up spreadsheets and tracking down real estate comps and their data is time-consuming. Luckily, this rental property calculator provides comps and allows you to export a ready-to-go PDF report to complete your analysis.
Now That You Know How to Buy Multiple Rental Properties This Year…
Need more help? Here are 5 Tips for Buying Multiple Investment Properties.