Things You'll Need:
- Working Capitol
- Handyman Skills
- Strong Will
- Patience
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Step 1
First things first - You have to have a little money to invest to be able to accomplish this task. If you don't have much cash go to your local bank and tell them you are interested in investing in rental property and fill out an application. They can run you through and see how much money you qualify for so you know your limit. Keep in mind you will also have to pay at least 20% down of the purchase price.
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Step 2
Contact your local REALTOR for any lower priced homes in the area, most of the time sellers will advertise their homes at more than what they would be willing to take. You can always make an offer! Make sure to let them know that you are an investor with cash or pre-approval from your local bank and are serious, if you can prove you are a serious investor they are more likely to call you first when new foreclosures or lower listed homes come up on the market. No need to sign up and pay for memberships at foreclosure listing sites, you can get the same information from your local REALTOR! Also ask if they are on an MLS system with other REALTORS in your area, that way you will know what is available from each company.
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Step 3
Usually if you do find a house that is in the lower range it would need some work, that's where your handyman skills come in. You can save yourself a lot of money by doing minor repairs and painting yourself.
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Step 4
Do the math. If you are lucky enough to find a bargain at $15,000. With a small commercial loan they will require you pay roughly $3,000 down, around $1,000 in closing costs. You may have to invest another $5,000 or more in order to get your rental livable. But you could have your loan paid off in just a few short years.
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Step 5
Advertise in your local paper and put a sign in the yard. Once you have decided on a renter make sure you call all of their references and former landlord to find out their history, if they have a bad history of not paying, they will usually continue this pattern. You don't have to give anyone a definite answer anyway, you can always say you have other appointments to show the house before you decide on a renter.
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Step 6
Have your renter sign a rent agreement and have everything in writing that you expect from this renter and everything they should expect from you, that way it's all in black and white.
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Step 7
When you collect your rent every month, take at least half of it or all of it (if you can afford it) and put it into a savings account, before too long you'll have enough money to invest in your next piece of real estate.
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Step 8
Patience is a virtue. This task is not simple and takes years to complete but is well worth the investment in the end and could help provide a cushy retirement!
