Real Estate investing can be an extremely lucrative endeavor. It provides residual income, while at the same time your future investment is essentially being purchased for you. With that being said, it is extremely important to perform your due diligence and ensure you are knowledgeable about the industry before taking the plunge and buying your first rental property.
Steps to take before you buy your first rental property:
- Do Your Homework! In addition to this being the first step, it is also one of the most important. There are several factors to consider, including location, price, average rent for the area, and the return on investment (ROI) that you are hoping to realize.
- Formulating a Plan - In order to set yourself up for success, it is vital to compile a realistic plan with criteria and goals that you can realistically achieve. This plan and criteria should be written down and referred back to often to measure your progress.
- Financing - It is tempting for potential real estate investors to fall victim to the mistake of looking to buy before obtaining financing. Don't let yourself fall victim to this: consult with the professionals in this area.
- Buying Your First Rental Property - Your dream becomes a reality! Your first stop should be at your local multiple listing service (MLS). In addition, there are numerous websites for this purpose, including:
An important part of this step is consulting with a licensed real estate agent. Remember, the sales commission is paid by the seller, so your are essentially getting this service for free as a buyer (you can't beat that price!). These are the basic steps leading up to the purchase of your first investment property. Just as with any other business venture, the more preparation that is spent before "getting your feet wet", the better!