The best part about residential real estate is that it offers a variety of properties for aspiring investors to choose from. Thus, leaving the door open for you to choose how to approach the rental property business and what type of property you want to invest in. One option is single family homes.
Becoming one of the most successful single family home investors is not that hard if you go through the right preparation process. Don’t worry, this process is not that hard either. So, without further ado, here is what you need to start with your first single family investment property:
Related: Investing in Single Family Homes: Why It’s a Must
#1. You Need to Get Your Finances in Order
Financial matters always come first. Therefore, the first thing single family home investors do is figure out their financial status. Ask yourself the following questions:
- How much money do I need to invest in real estate?
- Do I have the money to get into real estate investing?
- Do I need to go with external investment property financing? If yes, what financing method is best for a single family home investment?
- Do I have any debt I need to take care of before buying an investment property?
- Do I have enough reserve money saved for at least 6 months?
- Do I have a stable job?
- What is my credit score? If it’s bad, how do I improve it?
Bottom line is, figure out your finances before you start investing in real estate. Make sure you take care of your debt and improve your credit score if you need to. Furthermore, decide what type of investment property financing you are going to use. Some single family home investors choose to partner up with other investors while others choose to go with a conventional mortgage. To make it easier for you to decide, here’s The Best Approach to Investment Property Financing in 2019.
#2. You Need to Get Access to Real Estate Resources
Investing in single family homes requires access to the right resources. First of all, you will need to acquire a real estate education which means you need to have access to real estate websites that provide knowledge and real estate skills. Single family home investors need access to resources where they can have all the information available within reach at any time.
For this purpose, you can turn to Mashvisor’s real estate investment blog to learn all you need to know about becoming a single family real estate investor. Not only that, but you can also schedule a demo with our professionals who can help set you on the right path in finding and analyzing investment properties.
#3. You Need to Choose a Real Estate Market
For many single family home investors, choosing a real estate market might cause a dilemma. Some prefer investing in local markets and others don’t mind out-of-state investing. While both are great options and offer great advantages, your choice must be based on certain elements.
For example, one element is the rental strategy you wish to work with. Your local market might not support Airbnb rental properties while traditional rentals might be the best investment opportunity there and vice versa. In other cases, one housing market could promise higher appreciation rates than other markets. You also need to make sure single family homes are in high demand in the market of your choice. If it’s a big city market, for example, multi family homes might be more popular among tenants which can hurt your occupancy rates. So really, what you need is predictive analytics to be able to determine the best real estate market for your investment property.
Related: A Beginner’s Guide to the Single Family Rental Market of 2019
#4. You Need Real Estate Investment Tools
The property finder is one of those tools which can make the process of finding and buying a single family home for investment easy. All you have to do is pick the location, set a few filters (property type, rental strategy, number of bedrooms/bathrooms) and you’re ready to pick and choose an investment property. It is a very reliable tool for many single family home investors since it narrows down the choices to the absolute best investment properties with the highest returns so that you won’t have to worry about processing hundreds of properties on your own. Try it out for free now.
Now, we all know that math is not everyone’s favorite subject. But, there is no way to go without it in real estate investing. The profitability of an investment property is determined by a few measures that all single family home investors must learn. You begin with analyzing the property for return on investment. You do so by calculating the potential rental income for positive cash flow, the capitalization rate, the cash on cash return, and the potential ways to increase your rental income.
Since it is a lot to deal with, there is always an easier and more time-efficient way to go about it which is investing in real estate analysis tools. Fortunately, the investment property calculator is the best when it comes to property analysis. Moreover, it will also help you calculate the ROI based on mortgage rates and rental expenses. You’ll even be able to analyze the local housing market using this tool! Not only that, but it also ensures that you find low-risk investments which will save you a lot of pain from the very beginning. Learn more about Mashvisor’s investment property calculator.
Related: Are Low-Risk Investments Possible in Real Estate Investing? Why or Why Not?
#5. You Need to Figure Out Your Marketing Strategy
It is no secret that in order to make money, you need a good real estate marketing strategy. Well, that’s what single family home investors plan for before they even purchase the rental property. Successful investors think of how they’re going to market their single family rentals, when, where, and how much they’re willing to pay or at least how much makes sense in terms of return on investment. Since you are a beginner real estate investor, you are most certainly operating based on a budget. Therefore, in this case, you want to find ways that are cost-efficient to market your single family property for rent.
One way you can do it is by spreading the word. However, for this real estate marketing strategy to work, you need to have a good base of connections. On the other hand, there are also paid ways to advertise your property for rent. Most single family home investors use platforms such as Craig’s list, Airbnb, Zillow, and Trulia. Moreover, a professional property management company can also be a good way to do so. You can simply choose to hire a property manager and let them take over the task of finding tenants.
Want to join the single family home investors‘ club? Our website provides a variety of methods that’ll help you find profitable investment properties as well as profitability measures associated with each property you view. It will tell you all about the location, the capitalization rate, and the cash on cash return in addition to the optimal rental strategy. So, to start looking for and analyzing the best single family homes for sale in your city and neighborhood of choice, click here.