How to Start Buying Rental Property

There are several factors that influence the decision to start buying rental property. Research and preparation are key in determining the best money making properties to purchase. Preparing adequately will save you time and money in your rental property evaluation and purchasing process. You can begin buying rental property that provides you with positive monthly cash flow if you follow a simple, well thought out plan.

Difficulty: Moderately Challenging

Instructions

1. 
   How's Your Credit?

   Evaluate and Repair Your Credit – Your credit plays a major role in your ability to begin buying rental property. Get a copy of your credit report and review the comments the credit bureaus make regarding your calculated credit score. Concentrate your effort on getting the items repaired so your score can increase. This will give you more options because you’ll qualify for a higher mortgage loan amount.

2. 2. Explore Your Lending Options - There are several categories of mortgage financers, with thousands of companies in each category. Depending on your situation, you may want to use a local bank, a mortgage company, a private lender or a mortgage broker. Hard money lenders are also an option if you cannot qualify for a loan through other means. Each type of lender offers different terms and interest rate options. Make sure you investigate, review and compare your options to choose what is best for your situation.

3. 3. Locate Potential Properties That Meet Your Criteria – Determine the criteria for your property search. Geographic area, price range and time on the market are typical starting parameters. A good real estate agent who deals specifically with investment properties can use your criteria and provide a number of investment properties for your evaluation.

4. 4. Evaluate Your Rental Property Purchase Options – In order to start buying rental property that will provide the monthly income you desire, you have to perform some financial analysis. Compare the monthly payments for the loan you’ve qualified for with the estimated property expenses and the amount of rent you plan to charge. Do not consider an investment property that has expenses that are higher than the rent you can charge. There are plenty of better potential rental properties out there.

Tips & Warnings

• Get started buying rental property and learn your way through it. You have to get experience to succeed.
• Keep your expectations in check. Start small and try and find a mentor for guidance.

Resources

• Real Estate Guide 2 Success

[a4gllc]

on 11/20/2009 Great tips for this current market.

[survivoryea]

on 9/16/2009 Thanks for the good tips - the market is right for ths! 5*****