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Step By Step Guide To Buying a Rental Property

Are you planning to buy a rental property? Well, that is one of the brilliant ideas you can have in your life. Rental properties have proven to be a financially rewarding investment for investors. Buying a rental property is a fast and secure way to build wealth. However, knowing how to buy the rental property is important for you to have a lucrative investment. Buying a rental property is largely similar to buying a residential home with a few important differences to note. There’s a lot to do in preparation from the time you decide to buy a rental property to the time you actually get to buy it.

Here is a step by step guide on how to buy a rental property as you get into real estate investing.

Define The Rental Property You’re Looking For.

Buying a rental property can be exciting but it doesn’t mean that you should rush before doing proper research. Start looking into property investments the moment you decide you want to get into rental property investment. It is vital to know what you want before getting into the market. Research on;

  • The kind of property you wish to buy
  • The amount you can afford to pay
  • The average rent in that area
  • What kind of neighborhood you want to invest in and why
  • The average rent in that area
  • Recent real estate market trend
  • The return on investment you’d like to make

Have a Clear Plan and Develop Criteria.

Once you’ve done your research on the rental property you want to buy, you need to have plans and goals in place. Write down your plan and goals and always check on them in every step you make. Planning will help you remain focused and stick to your goals. For instance, if your budget is $175,000, you can easily get distracted by a property going for $240,000 because it has a beautiful garden. With a clear plan, you will be accountable to your goals and therefore stick within your limits for buying a rental property.

Arrange To Finance

How will you finance your property purchase? Don’t start looking for a property to buy before arranging to finance. Imagine the pain it may cause to realize you can’t afford the dream rental property you found. Go to the bank and find out the limit on how much you can spend on buying a rental property. Check out all the available real estate financing options and choose the one that will work best for you.

Start Shopping For a Rental Property

There are a lot of ways to find rental properties to buy. Search online at your local MLS to the see the properties available. Look for listings from websites such as;

  • Realtor.com
  • Zillow.com
  • Trulia.com
  • Redfin.com

It is important to work with a reliable local real estate agent because they have more information on the property listings on the websites. A real estate agent that specializes in working with investors would be better because they know the fine details of a good rental property.

Submit an Offer.

Once you find a rental property you want to go for and you’re clear with all necessary details, the next thing is to make an offer. If you’re working with a real estate agent, he will fill out the necessary paperwork and submit your offer. Work with your budget and don’t let your emotions take over. Be ready for negotiations and counteroffers.

Due Diligence Period

After agreeing on a price and getting a closing date, you need to begin your due diligence. This is a period in which you have time to get bank financing, property inspection and finish all the paperwork prior to the closing date. If the property inspector finds any setbacks in the property, you can go and renegotiate with the bank.

List Your Property for Rent

Finally, the deal is closed and you have the property under your name. You now have to start ‘landlording’. Being a landlord is not as easy as it may seem and therefore you need to brush up your skills.

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