7 Tips for Buying Rental Property

Word cloud for buying rental property and being landlord

Whether you are new to real estate investing or are a seasoned investor, it always helps to be prepared before buying any rental property. Buy and hold investment can be very fruitful if done right. If done wrong, it could be a huge waste of your time and money. Nobody wants to break even or take a loss. This is why we have put together this list of 7 tips for buying rental property:

1. Develop Your Investment Plan and Budget

No real estate investor will be successful without a good plan. Figure out your investment strategy and lay out your budget. Know how much you are willing and able to spend when buying a rental property. Understand what kind of rent returns you will need to be profitable.

2. Get Your Financing in Order

Whether you are paying all cash or you are financing the deal, make sure all your financing is in order before you start searching for rental properties to buy. If financing with a loan, you should have at least 20% of the purchase price saved up and ready to put down. Pay down other debts, improve your credit score and get your financial situation as healthy as possible.

3. Research the Market

It pays to do as much research as you can before you buy. Identify target areas and neighborhoods where a rental will do well. Know the types of renters in the area (families, college students, young professionals, retirees, etc.) and their financial demographics. Figure out what types of properties you want to buy and where. This will help you narrow down your search and refine your budget.

4. Decide if You Want to Be the Landlord

One of the most challenging aspects of owning rental property is the property management side of things. Decide before you buy if you plan to be the landlord or if you are going to hire a property management company to handle the day-to-day tasks. If you are going to do it yourself, educate and train yourself to be fully prepared for the experience. Being a landlord is never as easy as it sounds!

5. Conduct a Thorough Property Search

Just like if you were buying a house to live in yourself, you want to be thorough in your rental property search process. Be picky and rule out properties that are out of your budget or in areas where you don’t want to buy. Look at multiple properties before making an offer on any of them. Find something that’s exactly what you are looking for. Don’t just setting for the first property that comes up.

6. Run Careful Property Analytics

Property analytics are very important for any real estate investor. This is how you determine which property is most worth your investment of time and money. Figure out how much the property will cost, how much it will take to renovate it and get it ready for renters, how much ongoing maintenance it will require and what kind of rent price you can expect to collect. Also research vacancy rates in the area to avoid any properties that might sit empty for longer periods of time. Run all the numbers carefully as you narrow down your search and identify the best rental property to purchase.

7. Join the PropertyLark Network

PropertyLark has built up a network of experienced real estate investors. We bring excellent off-market deals to our members, while also offering comprehensive home search and property analytics tools that will help you make the best property buying decisions.

To learn more about the PropertyLark home buying network or to apply and see if you qualify, please fill out the contact form and questionnaire to the right of this page.