So, you want to buy rental property. It’s a great investment! What are the steps to buy rental property? My mother in law used to tell me that her father told her…”The roots of the tree are the most important part of the tree. If it is not planted in the soil, it can not thrive. People need property too, and if you invest in land you are inviting in your family.” It sounds better in Italian!
(1) Do your research. Look at Realtor.com, and find what is available in your area. If you are just starting out, a duplex of four flex is a great first rental property.
(2) Know your budget, alright you have looked online, now what? Once you know your budget, you can narrow down what you are going to view. I like to look at the BIG picture, knowing all the rentals allows you to dream big. You’re going to get there!
(3) Now, find a realtor. You don’t have to go with the first one you meet. This is a personal choice that is your choice! I prefer Sothebys, but ask some friends to refer you to someone. If you don’t like that person, you can tell them you want someone else. If you go with a person you don’t like, you’re going to be miserable. This is a big investment, so it should be enjoyable. The agent is suppose to work for YOU! If the agent takes you to the places you want to see, this is a great realtor!
(4) Look at the roof and heater/air. The two biggest expenses are the roof and the heater/air conditioner. If there is something wrong with the foundation, run away from the house. How old is the roof? Do the shingles look good, is there a sag in the roofing material? How is the heater/air conditioner? When was it serviced? Where is the filter? When was it changed? Other things to look for…Don’t focus on how ugly the place is, cosmetic aspects can get changed, paint, carpet, fixtures, etc, can all get changed!
(5) Don’t get emotional about the rental. Lets say you like this one…Ok, now you are going to need to check the rental market in the neighborhood. What are the average rents in the area? What kind of changes are you going to have to make to get that kind of rent? How much money are you willing to put into it? If it’s in your budget, no roof or air/heater issues, good return on investment. It is time to make an offer. Start off the lowest you can offer that is fair. You can always go up, you won’t be able to go lower. Try to detach from the property, it’s a house. Now, it’s time to make an offer.
(6) Do a professional inspection and a termite inspection.
(7) Be patient while you wait to see if your offer has been accepted. If it has, you are one step closer to having your dream.