Learn the Trade
Before you start searching for your first investment property, it’s important to learn as much as you can about rental property investing from those already doing it. Familiarize yourself not only with the process of buying and owning rental properties – and all that involves – but also with the best practices of successful investors.
You may also begin by reviewing some of the top books for persons new to real estate investing. Visit area meetings with business leaders and get to meet a local landlord or two; it might be a great thing to study up about landlord/tenant laws too. Absorbing as much as you can about every element of purchasing and owning rental real estate is the key to successfully making your first investment.
Prepare Your Finances
Together with learning the trade, it’s also vital to prepare yourself financially before acquiring a rental property. If you choose to finance your investment with a mortgage, you have first to get your finances in good shape. Optimize your credit score, pay down debt, and have at least a 20% down payment plus closing costs saved up before your first purchase.
Bidding on investment properties can be very competitive, so it’s also a good idea to choose a lender and get pre-qualified before you make any offers. Doing so will increase your chances of getting the best deal on your first rental property.
Crunch the Numbers
When you’re ready to begin looking for your first investment property, there are a few critical calculations you’ll need to do to assess each one. Acquiring an investment property isn’t like buying a personal residence or even a vacation home: it’s vital not to let emotion impact your selection of property. Alternatively, evaluate potential properties based on things like your anticipated return on investment (ROI), profit margin, and operating expenses.
Keep in mind to account for all expenses, such as taxes, landlord insurance, repairs, and improvements. It would be best if you also did a comprehensive rental market analysis for each potential property to assess your expected rental rate and the strength of local demand.
Choose a Strategy
At last, it’s worth noting that there are several different investment strategies for owning rental properties. Not only should you study all you can about these strategies, but for your first investment, it’s a good idea to choose an investing niche that is beginner-friendly. As an illustration, unless you are a contractor or handyman, it’s recommended to avoid fixer-upper properties for your first investment.
Moreover, it’s a smart move to aim for a lower-cost home your first time through the process. A lower-cost rental home can help you understand the full investment process while lowering the overall risk of your investment. This makes it an excellent starting point for new investors.
Starting in rental real estate investing can be both exhilarating and a bit daunting – there’s a lot to learn both before, during, and after buying your first investment property. As a result, one of the finest things you can do is have an expert Portland property manager on your side. At Real Property Management Assurance, we cooperate with rental property investors to find and assess prospective rental properties. Contact us today at 971-270-2600 to learn more.