Buying your first rental property means you’ll have real estate questions — let this be your guide. Use our list of commonly-asked questions to learn how to approach the essential steps in your investment journey, such as how to find the right property, what the buying process involves, and how to operate your investment for success.
Making the decision to invest in real estate is a major commitment, both financially and in terms of the responsibilities of being a landlord. It’s a good idea to be curious, asking questions so that you can develop a solid understanding of the type of commitments required and determine what’s the best fit for you.
However, the work doesn’t stop once you buy your first property. We’ll also cover the operational aspects of being a landlord, like tenant screening, creating legally sound lease agreements, following landlord-tenant laws, and managing maintenance and repairs.
Ready to take that first step into real estate investing? Use these questions and answers as your guide to strategically buying and running rental properties with confidence, allowing you to achieve your ultimate goal of building wealth.
Finding the right rental property
Once you’re ready to invest in the real estate market, here are the types of questions you’ll likely be asking yourself.
What type of property should I invest in?
One of the first decisions you’ll need to make is whether to purchase residential or commercial property. Residential properties include single-family homes, condos, townhouses and multi-family units. These properties typically require a smaller initial investment and tend to be easier to manage, making them ideal for new investors.
Commercial properties like office buildings, retail spaces, and warehouses, on the other hand, demand a larger initial investment and a deeper understanding of business needs and commercial real estate laws. However, they can offer longer lease terms, which provide more predictable, stable income.
Both types have their merits and challenges, so your choice should align with your investment capacity, management preference, and financial goals.
How do I determine a good location for investment?
To find a good location for your investment property, you should look at things like:
- Economic stability: Choose a housing market with strong job growth and ongoing economic development. These local market conditions attract more residents and support higher property values and rental rates.
- Population growth: Look for signs of population increase, such as new infrastructure projects or expansions in public services. These demonstrate a growing demand for housing in the local real estate market you choose.
- Real estate market trends: Understand local real estate supply and demand characteristics. Property prices are higher in a seller’s market with limited inventory, which impacts your investment returns. A buyer’s market with ample supply presents opportunities for attractive returns, but there could be underlying reasons for the oversupply, which may affect long-term property values.
- Neighborhood quality: Consider the quality of local schools, crime rates, and access to amenities like parks, shops, and public transport. Good schools and low crime rates especially enhance property appeal.
- Future development: Be aware of any planned developments or zoning changes in the area that could affect property market value or future buyer demand.
Where to Find Great Rental Property Opportunities?
Once you’ve decided on a location, the next hurdle is finding a solid opportunity that actually makes financial sense. No one wants to overpay on a dud investment that won’t make them any money, right? When hunting for those amazing and lucrative real estate opportunities, there are a few different angles you can take.
Working with a real estate broker can get you access to properties on the local MLS, or, if your real estate agent network permits, you can connect with agents peddling unlisted pocket listings.
Another approach is networking with wholesalers to get a line on off-market properties or building relationships with other investors already in the game who can tip you off to killer deals. Tapping into more channels improves your chances of landing a profitable investment opportunity in your target area.