10 Tips to jump into the world of Rental Properties! And your financial freedom!
The number question we get asked – is how do I get started in investing in real estate? You definitely need a plan! Finding someone who has accomplished what you would like is also a great way to create a support system for getting started!
Here’s what we tell the first time landlords:
- Budget! – Set up a strict budget before you even find a property. What can you spend to purchase property, what type of financing are you going to use, what is the down payment going to need to be. Are you going to need to renovate and bring a property to code? How much of your time are you really able to spend on it if it does need a lot of repairs? Set those boundaries before you find a property, don’t try to do it the other way around and a force a property to try to fit in your plan.
- Location, location, location! – Make sure that you are choosing an area that has an indication of growth, and is a desired area for living. Make sure you also consider how close the property is from your work and home. You don’t want to be spending 3 hours of travel time just to replace a $5 lightbulb.
- Educate yourself on the real estate market. – Once you have an area make sure you understand what the potential is for rental income. The high, lows, and medians. How much have the rents changed over the last 5 years. Is there an upswing, a decrease, or are they steady? What is the average vacancy time for the area? That will be your biggest expense as a new landlord!
- Understand the acquisition cost. – make sure you fully understand the entire expense you will incur and the debt you will take on for the property in an area you have narrowed it down to!
- Have an end game, and an out game! – Make sure you are not taking on real estate with negative equity. Make sure it can produce income. What is your ultimate goal? Use equity to buy more properties? If life happens and you need to get out, make sure you have a plan and understand that selling an investment property is different than your personal home.
- Network! You always hear the saying to surround yourself with great people, successful people… this rings so true for real estate investing. Find where the successful investors meet, and hang out, and events they attend. Find someone who has accomplished what you want to, and ask them questions! Find someone with similar paths so that you can learn them most from them, but also make sure you find someone who has already accomplished your end goal. They will be an amazing mentor.
- Join Groups! – You will have questions, challenges, and problems that arise. Get yourself out there and join groups so that you have resources when something goes wrong or you need quick advice. Find the experts and top real estate agents!
- Have a mastermind team. – it is impossible for you to be able to handle every little aspect, detail, and compliance needed for having a rental property. While you need to make sure you are educated and understand what should happen, make sure you build a team of experts who can help you accomplish your goals. That could be a financial advisor, an accountant, a property manager, or real estate agent.
- Be careful who you trust. – I know, I just said go meet people, make friends, and find a mentor…. But you really need to be careful who you are seeking advice from. Have a checks and balances, due your due diligence, make sure it’s not just good intentions someone has without any proof their advice is what you should be taking action on. Also… make sure you are not associating with someone who may have bad intentions. Trust your gut, and do your research!
- Have a timeline, and stick to it! – Don’t catch analysis paralysis. All too often the first time investor can’t take action or pull the trigger even after months and months of trying. If something isn’t working. Change it. You are in control of your decisions and if you are stuck in a rut, make some changes. Maybe your networking circle doesn’t have the same vision as you do, causing you to doubt what you are doing, maybe you need to find a partner to go in with you on the deal, maybe you just need a fresh perspective. While you should do your research and understand what you are getting into – do so in a way that allows you to not be consumed by the entire process. Investing in real estate can be your biggest step to financial freedom, and freedom to generate passive income while giving you more time to work on things that help you accomplish other goals and dreams you have for your life.
This certainly doesn’t cover everything, but it’s a great start for things to consider when getting into real estate investing! If you find yourself in need of networking partners, or people in the industry you’d like to talk to- reach out to us! We can connect with someone who can assist you in taking this amazing step into the real estate world!
Visit our Education Center for more tips, tools, and resources to get you started on your real estate investing journey!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.