Here are three steps to take to successfully land your first rental property, because lets face it – you need to take action. Instead of getting bogged down in where to start I’m going to lay it out for you right here so you can get rolling toward your goal of being a rental property owner!
Rental Investing 101: Three Steps to Your First Deal
Step 1.) Find Your Market
In my opinion it is a bit easier to start in your local market, however it is not a must. You may live in a place where the numbers don’t work – no deal is always better than a bad deal. Go outside of your local market if need be.
Once you have zeroed in on a market be sure to get an understanding of what areas are more desirable than others. What are average rents for the area? Are there spots with a lot of crime, etc etc.
Reach out to local real estate agents and other investors to get feedback on these items. Whether it’s calling an agent inquiring about the area or going to a local Real Estate Investors Association (REIA) meeting to pick other investor’s brains – gain whatever information and feedback you can.
Step 2.) Analyze Deals (Run the Numbers)
This is actually one of the most important pieces when acquiring rental properties. The bottom line is if the financials don’t show positive expected cash flow then there is no point in pursuing the deal.
We are not getting into rental property investing to lose money each month, right? Quite the opposite.
I always run the numbers with a rough estimate of rent, purchase price, taxes, insurance, etc. to see if it’s in the ballpark of the cash on cash return I desire. If not, it gets crossed off the list.
If you are not using a property calculator to analyze deals be sure to download the ScaredyCatGuide Property Calculator. It’s what I use to analyze all my deals.
Step 3.) Build a Team/Network
Be it a handyman, contractor or property management firm. You should be getting references and vetting out these service providers before you close on your first property.
Let’s say your first property needs some rehab to be rent ready? Well, it is best to get estimates of those costs during your inspection period to see if it wrecks your numbers, thus turning it into a bad deal.
Plus, if estimates are within the cost window for the deal to work – you want to schedule the rehab with your contractor so they can get to work the day you close. Like they saying goes: Time is Money.
Conclusion
So there you have it – three clear steps to get you toward closing your first deal.
Side Note: You should get an idea of how much financing you can secure to not waste time looking at properties out of your price range. Just about any lender will help you with this by doing a quick pre-qualification.
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I am new in Steemit. It is the second post I read. I congratulate, I am Realtor in my country Venezuela and you note is very clear and honest.
Thanks! Welcome to steemit!
Good points. The talking to the lender may be good to put as point 1. That could help determine if one needs to invest elsewhere or locally. I am a big believer as well as invest where you live when you can do so. It takes away so much risk.
A great book if someone once a step by step manual for a successful blueprint is Millionaire Real Estate Investor by Gary Keller & Jay Papasan.
Yeah, that book is a good one for sure....I like this one too https://scaredycatguide.com/book-store/ ;-)
This is very inspiring and I learnt great tricks from this. I will just want to add the last point which is about Building a Team.
The kind of team you build also determines the level of productivity and income you will achieve. There are some people who chose the wrong team due to the fact that they Wana make money very fast, but unfortunately the team caused failure to the project. Let's be very careful when we choose our team because their attitude towards the business determines the outcome of such Business. It's always advisable to form team with people who are passionate about the success of the proposed project. Look for quality people and not quantity. There are different scenarios whereby fraudulent activities occur during Business activities due to the lack of high quality people. We should build team with trustworthy people and passionate workers who can make us Successful.
Thanks for sharing this lovely post @scaredycatguide with love from @hardaeborla.
Yes, I agree on the building a team part. My points were just starters to get folks following...definitely need to keep it going and have a solid team of contractors, inspector, mgmt, insurance person, etc.
@scaredycatguide.. You are very right. I agree with you
Thanks for advice @scaredycatguide. Buying a rental property is scary I would think for most people. But I think a better place to have your cash working than in the bank.
Basically anything is better than the bank right now ;-)