The concept of buying your first rental property can be a daunting one, especially if you’ve never owned a home before. With that said, the experience can be rewarding, fulfilling, and financially stimulating if done correctly. This is especially true for new buyers that are getting into their first home. Today I will share some tips for following this path.

1. Educate yourself. It can be easy to listen to all the negativity these days about real estate. “The market is too crazy”, “A crash is coming, you should wait”, “interest rates are too high”. It’s not that these things are or aren’t true, but in my experience, they’re usually spoken by people that know nothing about real estate. This is NOT investing advice and I’m not saying you should or shouldn’t get into real estate, but that you should research the subject thoroughly and do your due diligence. I like to make my investing decisions off of facts and credible information, not hearsay. 

2. Silence the noise. If there are people in your life injecting negativity and telling you not to pursue something (anything) that you’re passionate about, I would say it’s wise to keep your distance. Instead, I would surround myself with people that are in the industry and know a lot about it. Learn from them, and like the previous point, get the facts. 

3. Get pre-approved. Before I go out and start looking at potential rentals, I would talk to a bank about financing. You could talk to a loan officer or a mortgage broker (a loan officer usually works for a bank, while a broker can find you financing products from multiple different banks). This will give you a solid idea of where you stand financially, what you need to do to be in the best position to buy, and also teaches you about various financing options. For example, first time homebuyers can get FHA loans and other types of financing that require as little as 3% down if you live in the home. This is a game changer. The only caveat with this is that typically when you put down less than 20% for a home, you have to pay mortgage insurance. Things to keep in mind. 

4. Build your team. It sounds silly to say, but yes, if you want to be successful in this game, you want to have a skilled team. Doesn’t have to be anything crazy, but if you followed point #2 and #3, you should at least have a qualified realtor and loan officer or mortgage broker at this point. Emphasis on qualified. I say this because it seems to me like today more than ever, everyone and their mother is a real estate agent or loan officer. Not knocking on anyone, but just because they can pass a test does not make them qualified in my opinion. Same goes for people that are related to you or your social circle, again, just because they are a familiar face does not mean they are the right person for the task. You want the best people representing you and helping you through the process, it will make your life so much easier, trust me. This is a good time to do your due diligence, and make sure you’re working with someone that’s not only experienced, and knowledgeable, but also is personally involved in real estate. You may also want to have a skilled contractors on stand by as well incase you need them. 

5. Start looking. The best advice I can give for this point in the process is not to take it too seriously. Where we live in the Metro-Boston area, the real estate market is extremely competitive. Out here, you could write 20 offers before one gets accepted (I use this example because it happened to me). If you’re emotionally crushed every time something you like doesn’t work out for you, you’re going to get very discouraged. Instead, try to have fun with it. Make a day of it, bring a friend, keep things light. If you’re looking at stuff that needs a lot of work, not a bad idea to bring a contractor. Just enjoy this part and learn as much as you can. Going to open houses is also a great place to network and learn from realtors and investors. 

These are the top things I would focus on if I was buying my first rental property. I think the last one can be the longest and most frustrating part, but again, if you keep swinging, eventually you’ll hit. Do your homework, learn from the best, take action, and stay positive. 

Thanks for reading! 

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