6 Things To Think About Before You Buy Your First Investment Property

It is no wonder that you’re toying with the idea of purchasing an investment property. Rental markets are about as high as the real estate market is and they make for great long term investments. 

It all sounds sexy at the moment, but I can understand the nerves when you really sit down to think about it. Here’s the deal - just like anything….it’s scary to start. There are some things that are learned through experience that you couldn’t predict. 

For the planners of the world (hi I feel you…🙋🏼‍♀️) we don’t really love that answer. So I’ve compiled 6 things you should know before you buy your first rental property. 

1. Don't let your emotions play with you - numbers are numbers. So often when looking at property, we go with which one “feels like home” and while that's all fine and dandy, make sure you’re looking at the numbers first, feelings second. 

2. Do your research - an analytical approach is going to serve you well. Doing your research first means knowing what type of renters you would like to attract. What are comparable rents in the area? Are you planning on short term rental periods or are you in it for the long term tenants? Researching the market is only going to make you a more educated buyer and educated buyers make smart choices. Hint: lean on your Realtor for this information - they’re in the game and will be very helpful towards you.

3. Secure the down payment - Investments are usually 20% or more down payment so one of the very first things you should do is plan on where that money is coming from. Are there any upgrades you want to make to it? Plan on those too. **Learn how to use your equity in your home to purchase investment properties** 

4. Calculate expenses and profits beforehand - what will you rent for, what will your payment look like, what is the level of profit you want to take home? Are there any major upgrades that need to happen before the house hits the market. You also know things will break, budgeting for the high ticket items (ie furnace) will serve you well. The more information you have and plan for, the smoother sailing it will be.

5. Start small - get your feet wet with a smaller property and see how it goes. Then we can get into the bigger risk big reward type stuff. Starting small with help you gain experience, mitigate your risk and learn A LOT. 

6. Identify your squad - it’s important, especially if you’re looking at buying more and more rentals, to develop a great relationship with the people who are going to help you get there. Your Realtor, your lender and if you’re going to use a property manager, your handyman! Make your goals clear so everyone is on the same page. 

You absolutely can be an investor of real estate, there is no magic wand that officially deems you “worthy”. Like anything you can prepare yourself, gain experience, and tweak when you get ready to do it again.