50 Tips for Investing in Rental Property

Here are some tips for investing in rental property. Click through the links to get more specific information. This website is loaded with free real estate investing information, so take advantage of it.

Getting past the fear

Many people dream of buying investment rental property but are afraid to pull the trigger. They look at property, read lots of books, search the real estate ads, but never make an offer for a property. How do you get past the psychological hurdle and take the plunge? There are 4 major barriers that people seem to have that prevents them from starting to invest in rental properties:

1. Fear of large debts - read how to get rich


2. Inability to get financing - read about How to Finance Investment Property


3. Concern about dealing with tenants - read about the Rent to Own Strategy


4. Lack of confidence over making repairs - read about Fixing up Property

Getting the knowledge

Some people jump into real estate investing without a thought or plan. Big mistake! Get some knowledge

5. Spend some time reading books on real estate investing


6. Join your local real estate investment club


7. Participate in a real estate forum , like BiggerPockets


8. Take your time and buy houses slowly at first - you don't need to feel that you have to get rich overnight

What Type of Real Estate Investment to Buy?

9. You may have lived in a house or you do now


10. Houses are the most liquid of real estate investments


11. You can build your experience and confidence slowly dealing with one tenant


12. So a big tip for investing in rental property is to buy a house



Easiest Way to Start Investing in Rental Properties

13. Buy a house that needs cosmetic upgrades


14. Fix it up to make it more valuable


15. Rent it out using a lease-purchase agreement


16. Buy another house



Before you Start Looking for Property



17. Start saving money for a down-payment


18. Clean up your credit report


19. Talk to a mortgage broker to see what kind of loans you might qualify for


20. Talk to successful people, family and friends to see if anyone is interested in loaning you money with their self-directed IRA or has cash to invest

Buying a House for Investment



21. Look for houses in the starter home price range for your area


22. Find the rents for comparable homes


23. Will the house generate a positive cash flow when subtracting PITI from average area rents? Don't buy a negative cash flow and hope you make out on appreciation.


24. Are the sellers motivated due to special circumstances? If not, don't waste much time.


25. Look at lots of houses before making an offer - get a good sense of what comparable houses are selling for


26. Use a buyers agent if you are using a real estate agent - not the sellers agent


27. If you use a real estate agent, find a young, hungry one. A successful agent will not want to be looking at dozens of houses with a new investor


28. Cruise neighborhoods on a bike or in your car to see what an area is like before deciding if you want to invest there


29. While cruising neighborhoods, make a note of any houses that look like they are vacant


30. You can find foreclosures free by looking up the addresses of houses that look abandoned at your local county Courthouse


31. For your first house find one that needs cosmetic changes - don't try to tackle a major rehab job


32. Do a thorough home inspection before you make an offer


33. Always offer at least 25% below asking price. If there are multiple offers - walk away


34. Always include a "subject to" clause in any offer to allow you an out (subject to...financing, inspection, legal approval, etc.)


35. Line up your investment property financing before making an offer


36. Don't buy one bedroom houses - too hard to sell or rent out


37. Always keep in mind your strategy when buying - if no one will rent the property due to location, don't buy it



Closing the Deal

38. If it's your first purchase, consider having a real estate attorney look over the contract


39. If you are not an expert at home inspection , consider spending a few hundred dollars to have a professional home inspection done. You could learn how it's done by watching.


40. If you are getting seller financing - make sure the Deed is recorded. If there is a problem, it will be much easier if there is a public record of a sale showing you as the owner.


41. At the closing, double check all of the documents. I've seen many errors on closing papers in my 20 years of buying and selling.



Fixing Up Your Property

42. Make a list of all the upgrades that need to be done


43. Look over the list of best home improvements and complete those in the order I've described


44. Decide if you can do it yourself, or if you need to hire a general contractor or just some sub-contractors


45. Don't be intimidated by doing repairs yourself. There are many "how-to" videos on YouTube now. With time, you can learn to do many tasks yourself


46. Remember curb appeal is needed to get prospects in the front door


47. Be sure to seal any peeling paint that may be lead-based



Renting Out Your Property

48. Read about how using a rent to own strategy you will get a better quality tenant


49. Use free rental ads on Craigslist or a "rent to own" sign - ads in big newspapers are a waste of money


50. Always screen your tenants. Get the names of the last two landlords. The current landlord might give a good reference just to get them out


51. Always get all of the money upfront. Don't let tenants "make payments" on their deposit or option


52. Document everything you say to tenants or do in response to complaints. Expect that at some time, someone will sue you


53. With a lease-purchase agreement you are also getting some extra money in case tenants default or damage your property



Records and Taxes

54. Guess what - if you own rental property you are at high risk for a tax audit - so keep good records


55. Learn a little bit about tax laws and all the advantages of owning rental property


56. Don't ever be afraid to take all of the tax deductions due to you - the IRS won't give you brownie point for not taking a deduction


57. Never fear an audit - I've been audited 4 times and not ever lost to the IRS - just keep good records


58. Make sure you have at least $1 million of liability insurance

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