Are you a new real estate investor looking for ways to make money through real estate investments? Are you just starting out in the world of real estate investing and looking for the best investment strategies out there? If so, you should know right away that rental properties – whether traditional rentals or Airbnb rentals – are one of the best real estate investment strategy if you want to make money in both the short term and the long term. However, if you are someone new in the real estate investing business with no experience in buying, owning, and managing investment properties, you must be asking yourself the question: How to start out? How to buy rental property as a new real estate investor? No worries, we are here to help you. Buying your first investment property might sound scary, but it should not be as long as you know how to go about the process. So, let’s explore together how to buy rental property as a first time real estate investor in 7 easy steps.
How to buy rental property: Step 1: Check out your finances
Whether you are a brand new real estate investor or an experienced one, you must know that in order to buy an investment property, you need money. The first place to look for money when thinking how to buy rental property is logically your own savings. So, before you start your real estate investing business, study carefully your finances to see how much you can pay out of your own pocket (or bank account). This will be an important factor in deciding what investment property you can afford. Even if you go for a mortgage to finance the purchase of your rental property, you will need to put a 20% down payment.
How to buy rental property: Step 2: Study the financing options
Maybe as a new real estate investor, you have some money saved up that you can invest in a rental property. Maybe it is enough to buy a nice investment property though most first time real estate investors do not have the luxury to pay for their investment property all in cash. If that’s the case with you too, no worries, you can always apply for a mortgage loan. It is important to go to your local bank and talk to a mortgage expert there to see whether you can take a mortgage loan and how big. This will determine what type of investment property you can purchase. Moreover, it’s always a good idea to get a pre-approval for a mortgage loan so that you can act fast when you find your ideal rental property for sale.
Related: The Investment Property Financing Tips That Every Real Estate Investor Needs
How to buy rental property: Step 3: Talk to local real estate experts
Regardless of whether you plan to invest locally in your own town, in a neighboring city, or out of state, you must find some people who have already invested in this particular housing market and talk to them. Every housing market is different and has its twists. Thus, it is always best to get advice from local real estate investors or other real estate experts, especially if this is your first investment property. There is so much that you can learn from these people. And the sooner you get to meet and talk to people in the world of real estate investing, the better, because soon these people will form the basis of your real estate investment network.
How to buy rental property: Step 4: Do a lot of research
When buying your first investment property, you should do a lot of research to decide on the best housing market for your specific needs as a first time real estate investor. Start out locally by studying your city’s housing market to determine whether it’s a good match for your needs as a first time real estate investor. If your real estate market analysis shows that your local housing market is not a good option at the time, don’t be afraid to go further and study other housing markets. Just make sure to select a buyer’s market and one which benefits from strong demand for rentals.
Related: Real Estate Market Analysis: The Basics
How to buy rental property: Step 5: Check out all possible property listings
Once you’ve settled on the best housing market for your specific needs as a new real estate investor, it is time to move on to choosing the best property for your first real estate investment. Choose a small property which does not cost too much, which is in a good condition, and which would not require much maintenance. After all, real estate investing is all about learning by doing, so it is always better to start out small and then grow gradually as a real estate investor. To find a good property when learning how to buy rental property, check out various sources of property listings including newspapers, websites, and others. The more options you have, the better because you have a higher chance of finding the property you need.
How to buy rental property: Step 6: Work with a real estate agent
Experienced real estate investors rarely need real estate agents for their transactions – whether a property purchase or a property sale. However, this is not the case for new real estate investors who are just learning how to buy rental property. If you are new in the world of real estate investing, it is better to rely on some professional help in buying your first investment property in the form of a real estate agent. Make sure to choose a real estate investor who specializes in investment properties as opposed to homes. Though you will have to pay extra in the form of real estate agent fees, this extra money will be totally worth it as the real estate agent will be able to find you the best investment property around.
How to buy rental property: Step 7: Conduct investment property analysis with an investment property calculator
Although you will be working with a real estate agent as a first time real estate investor, it is good to start learning the ins and outs of the real estate investing business right away. Thus, from your first rental property make sure to start learning how to conduct investment property analysis if you want to learn how to buy rental property on your own in the future. Actually, this analysis is quite easy nowadays due to the emergence of the investment property calculator which will do all the data gathering, data analysis, and calculations for you. If you want a really good investment property calculator, get Mashvisor’s. It will save you lots of time and energy while always allowing you to make the best real estate investment decisions and buy the most profitable investment properties. It will even help you select the best rental strategy (whether traditional rentals or Airbnb rentals) for your location and for your particular investment property.
Related: Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier
Becoming a real estate investor is a very exciting endeavor though it might sound a bit intimidating at the beginning. However, if you follow the 7 steps above, you will soon learn how to buy rental property entirely on your own. Then, you just need to keep growing your real estate investment portfolio to prosper as a real estate investor.
When you are ready to start the search for your dream rental property, just come to Mashvisor for thousands of available investment properties across the US.