Buying Rental Property: A Step by Step Guide

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It may be common knowledge that buying rental property can be one of the most secure and fastest ways to build serious wealth – but the “how to” knowledge is not so common. The steps to buying rental property, however, are not that drastically different from buying your own home, with a few important differences. This article is going to explain step by step how to buy a rental property and begin your entrance into real estate investing.

The Book on Rental Property Investing 3D Cover MASTER(fyi…this post was the foundation for two complete, full-length books put out by BiggerPockets this year! If you want to learn everything you need to know about investing in rental properties, click here to pick up The Book on Rental Property Investing and The Book on Managing Rental Properties.  Okay… back to the post!)

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Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.

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Step One: Do Your Homework Before Buying Rental Property

Please – please don’t skip this step. As soon as you’ve made your decision that you want to buy rental property, it can be easy to start shopping for homes and picking out the paint colors. However, your first step begins long before ever stepping foot into a house.

Doing your homework ahead of time means researching:

  • What kind of investment property you want to buy
  • How much you can afford to pay
  • What kind of neighborhood you want to invest in
  • What the average rent is in your area
  • What kind of return on investment you hope to make.

Doing your homework can be difficult for one major reason: You don’t always know what questions to ask. Because of this, BiggerPockets recently created the free “Ultimate Beginner’s Guide to Real Estate Investing” which will help any new investor learn how to get started. This guide will help teach you the necessary questions to ask.

Step Two: Make a Plan and Develop Criteria

Once you’ve done your initial homework, you can begin making a plan and setting your criteria. I highly recommend you write down your plan and goals, and refer back to them often. If you are looking to buy a single family home for between $150,000 and $200,000 – it’s easy to get distracted by the home with the beautiful garden for $250,000. By stating your plan and your criteria, you can hold yourself accountable to your goals.

Step Three: Arrange Financing

One of the most common mistakes made by homebuyers is to start searching before arranging financing. However, this error has caused untold heartache when buyers find they can’t afford the dream home they’ve found. This same principle applies to buying rental properties. Before shopping for your new rental property, be sure to talk with a bank about how much you can afford to buy. There are numerous different paths to real estate financing so be sure to weigh all your financing options before making your choices.

Step Four: Begin Shopping For a Rental Property

Now comes the exciting part! There are a lot of great ways that you can get find rental property. Begin by looking online at your local MLS to see what’s available. There are several websites you can use to find the listings, such as:

Each of these sites search generally the same MLS listings, which all real estate agents have access to. However, these sites do not contain all the information needed (and sometimes do not even contain all the listings, either.) For this reason, it’s important to get in touch with a local real estate agent that you can trust to get you more information. An agent is generally only paid, by the seller, when you purchase the home – so for a home buyer, using an agent is typically free.

It’s often helpful to find an agent who specializes in working with investors, as they are more keenly aware of what makes a good rental property. Also – be sure to share your criteria (See step two above) for your rental property, and allow your agent to help you find the best properties that meet your qualifications.

Step Five: Make Your Offer

When you find a rental property you want to pursue, and have walked through it, your next step is to make your offer. To do this, your real estate agent will fill out the paperwork based on your requests and submit your offer to the selling agent. The selling agent will bring your offer to the seller, and negotiations will begin. For a great article on negotiations, check out How to Negotiate: 7 Real Estate Negotiation Tips.

Be sure to only spend the amount that makes the most sense to you. Determine how much cashflow you need to make and don’t let emotion override the numbers. Be willing to walk away and you’ll always hold the upper hand in the negotiations. If you can’t agree to a number that works for you – it’s not worth buying. Remember:

It’s better to have no deal than a bad deal. (Tweet This Quote!)

Also remember, price is not the only consideration. Depending on the popularity of the property and the strength of the deal, there are many other issues to include in your offer, including:

  • Closing date
  • Inspection contingency
  • Financing contingency
  • Seller financial concessions
  • and more

These items are all important to discuss and decide if you will include in your offer. Be sure to talk with your real estate agent about all the necessary parts of the offer. Once you have a signed agreement with the seller and have agreed upon all terms, you now have what is known as “Mutual Acceptance.”

Step Six: Due Diligence

You’ve finally agreed on a price and you have a closing date set. Now, it’s time to begin your “due diligence.” During this period (according to the dates specified in your offer) you will hire an inspector to perform an condition inspection on the property, looking for any defects that may cost you money in the future. If something is found, you can always go back and re-negotiate with the bank (as long as it is within your “inspection contingency” timeline, as specified in your offer.)

If you are buying in a “hot market” it may not be wise to nickel-and-dime the seller, or they may refuse to perform the steps and walk from the deal, giving it to someone else. On the other hand, it’s important that you don’t get stuck with a property that has major problems – so be sure to weigh the decisions carefully and keep your goals in mind at all times.

During this time between “mutual acceptance” and closing – you will also finalize the financial arrangements with your bank or other lender. This is also the time when the Title Company or Attorney, depending on your local customs, will take over facilitating the transaction. When the day of closing comes, you will sign documents and will be given keys to your new rental property.

Step Seven: Start Landlording

Finally, the deal has closed and you are now a landlord! If the property is vacant, you will need to learn how to rent your house (be sure check out How to Rent Your House: The Definitive Step by Step Guide” here on BiggerPockets. You will also need to brush up on your landlording skills, so be sure to check out “How to Be a Landlord: Top Ten Tips for Success” and ask questions, for free, anytime on the BiggerPockets forums. Also – don’t forget to check out the BiggerPockets Ultimate Guide to Tenant Screening to ensure you only rent to the best tenants!

Do you have any tips for buying a rental property? Or do you have any questions? Leave your comments below to discuss!

About Author

Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on,,, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather. A life-long adventurer, Brandon (along with his wife Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.


  1. jeffrey gordon on

    Thanks Brandon, you are earning your money these days, lots of great content coming out of BP this year!

    I would really endorse getting hooked up with a investment property real estate agent with a good IDX on their website so you can get the most accurate and update to listings. Zillow/Truila etc. are proven to not be as accurate as the local MLS they are getting their listings from.

    A VOW, if available, might be even better, but unfortunately Redfin is not in many markets for folks around the country.


    • Brandon Turner

      Haha thanks Jeffrey! I like all this writing and research I get to do. I didn’t realize Redfin didn’t go everywhere – but that makes sense. In Washington, it works well but I think it’s based here (maybe?) I have to admit I don’t know what a “VOW” is – can you elaborate?

      But yeah – having a solid agent you can rely on for info is priceless.

  2. I would highly recommend using an agent that has rental properties themselves. You would not hire a financial consultant that is not invested in the financial markets; real estate should be no different. Buying through someone who has rental properties will be able to point out key features in the house that could be maintenance nightmares that only a individual with rental properties would know.

    • For my W2 job, I’m an elementary school principal, and when you wrote about homework, I naturally wanted to chime in. I believe that most new investors would look at that list, give these items a little thought, and proudly say that they did their homework- much like the students I see in my office. Instead of just “researching, ” I would recommend that new investors get a spreadsheet, like some I’ve on BP, and crunch the numbers on 20 real properties that they think meet their criteria. On each of these 20 practice properties, they should run the numbers as flips or buy-and-hold properties. This practice will help them know the difference between ARV, CF, NOI, and all of the other acronyms that represent formulas which are used to analyze deals. If they don’t do their homework, Brandon, send them to the principal’s office. Oh, and BTW Brandon, keep up the great writing- you’ve earned an “A.”

      • Brandon Turner

        Solid advice, John! I agree, I think running the numbers is so important. I think too many people fall back on the “I’m not good at math” line – but that makes it all the more important to learn it. And thanks for the “A” – where were you when I needed those in High School!?

        By the way, hint for the day – you should hook up your email to a “” profile, so your picture shows when you comment on certain blogs like this one! It takes like 30 seconds and will show up on any blog on the internet that uses wordpress. And it’s free. Can’t beat that!

      • Alex, respectfully I have a different view when it comes to realtors that own rentals. It’s just human nature to keep the better deals for yourself. If the property is not good enough for them to purchase, I usually find that is the same for me.

      • Genise Fernandez

        Hi John. I’m a total newbie when it comes to real estate investing, and I actually just wanted to thank you for the advice. I read over this article and I was already listing everything I wanted to research to follow up, but it never dawned on me to get any actual practice in. Thanks for the reminder!

  3. Just discover your blog! My wife and I have begun investing about 2 years ago and are thinking about adding rental properties. I noticed in your article you put the offer making before the due diligence. Would you want a good idea of the cost of rehabbing and repairs before making an offer or is it a better strategy to renegotiate with the seller once the cost of rehabbing is locked down? I can see the benefits of both.

    • Brandon Turner

      Thanks Dennis,

      I love investing in rentals. Sure, it might take some more work, but the returns can be fabulous and there is just something about it that makes me feel good 🙂 Be sure to check out the BiggerPockets Start Here page. This site is HUGE and easy to get lost in – but there are two main focuses: The Blog (which you found) and the Forums (which are VERY active, and great for live discussions all the time.) So jump on in and let us know how we can help you out!

      • Thomas Jones

        Brandon, can you give me advice on the property I own? I bought a multi-family in 2009. My cash reserves has not grown for various reasons. I still pretty much have the same amount in my money market that I did after closing. Perhaps my situation would be better served by a financial advisement website, but to make a long story short, I’m in a situation where I have no money to pay for a car outright with cash unless I finance a car. In fact, my reserves are so small that it is only enough for a down payment on a financed car. I also own a condo that has a line of credit. The condo is upside down. Would it be better to use some of the line for a car since the rate is lower than a car loan and I can write off interest on income tax? The other idea is to sell my multi family and use the proceeds to buy a smaller multi with a big down payment, pay off the condo, pay off the solar panels on my multi, buy a car, and have some left over for my wife and I. The new smaller multi would be rented out, thereby turning even if a modest profit, and the condo rent money, except for condo fee, would be free money because there would be no mtg left, I’d have a newer used car and extra money left over for both of us to use if we feel strapped for cash. Does this idea to sell the multi to accomplish these ends make sense? Or should I get much higher rent? I would think the rental income on a multi should go to pay the mortgage AND cover maintenance. That income now doesn’t cover all expenses, but I don’t think raising the rent by say even $200 accomplishes everything that I noted above. Or should I try to hold on to my 3 family (multi)? Trying to sell the other property, the condo, is pointless. Values haven’t gone up enough. And if I could sell the condo and buy a car, I can only buy a car. Selling the condo doesn’t accomplish all the other goals I would accomplish with selling the 3 family multi. By selling the 3 family, we would have extra money left and two rental properties, one of which generates more profit than the other (namely the condo would make more than the two family multi). But as my wife pointed out, we would no longer have the house we have now. I originally bought the 3 family with the intention of keeping it long term and selling it at retirement time, but because the hope of selling the condo to buy a car is dashed, I’m left with selling the multi to buy a car, and it just so happens I could do the other stuff mentioned too. What would you do? Sell your multi and accomplish all that financial stuff, including buy a car and have some money left? Or would you keep the multi for the future, and if it’s a car you need, then finance it or put it on the line of credit and call it a day?

  4. It’s OK to get your feet wet buying retail from and agent, but don’t forget finding FSBOs and advertising for buyers, as well as mailing to people in foreclosure. I’ve bought many of my dozens of rentals “subject to” (search it in the forums on this site) with between $10 and $5000 down, and a few have paid me to take their houses, I’ve also bought many on Contract for Deed at 0% interest. Though I’ve paid cash for many, I believe I’ve gotten better deals (and financing) buying that way, and it’s more fun. Plus with little of my own cash (or loan) in the deal, my returns have exceeded 1,000% in several cases, even just as cash flowing rentals. It doesn’t take much of a positive cash flow to make that return on an investment of $10, plus a few closing costs.

    Yes, it’s harder to find those deals (and yes, decent sub2 deals are still around), but it’s worth it, since I’m usually the only buyer they’re talking. In exchange for a good price, good terms, or both I can offer a quick, no hassle, “as is” closing without Realtor delays, etc. Creative real estate is a big business and a great opportunity, which I recommend anyone serious about this business look into.

  5. I want to start investing in rentals in about a year. I’m waiting to get enough money saved up to buy outright or put a sizable down payment on my first rental. I was thinking of using a rental company due to the fact I will be out of state from the rental(s) and won’t have the time to deal with the problems that come up or to show the house. I will be working 70-100 hours a week in my new job, yes up to 100 hours a week, so you can see where my time crunch is from. That and the fact I want to buy in TX and will be working in ND. I hope to retire in 7 years or at least work only for myself.

  6. Hi Brandon,
    I am buying a rented condo.
    How can I make sure that I receive all the documents, security money, key’s deposit, and the last month rent from the seller?
    Is there any time limit there that he deliver everything to me after closing or it should be at the time of closing?

    Thanks for your advice.

    • Brandon Turner

      Hey Dave,

      Are you buying through a real estate agent or private party? Either way – the title/escrow company or attorney that you use should take care of this for you (I’d ask them though) if your Realtor doesn’t. But, it definitely should all be in your possession by the time you close – or don’t expect it at all!

  7. Dave, You should require this info as part of your due diligence prior to closing, trust but verify. It’s not only common, it’s expected. I’d recommend looking at his past couple years’ Schedule E’s for the property, too. And if you can control the closing (and title company you use) all the better. If seller doesn’t want to use a title company, find one and agree to pay for it, so you can control that part, with their help, If seller won’t comply with your requests, that’s a big red flag.

  8. Nice overview. It’s tough to summarize all the steps in doing your homework. The steps could go on for pages. The neighborhood needs to match your personality type. Not everyone who can afford to invest in a low-income neighborhood should.

    When you consider the fabric of the neighborhood, you’ll see that neighborhoods that consist of mostly renters, look for the landlords to advocate for it. If you don’t want to go the extra mile, the consider limiting yourself to middle class neighborhood and better.

    Please, cause no harm while investing.

  9. Timothy Trewin on


    I know I am late to the show in regards to responding to this blog, but it is an excellent one and it truly gets myself and my wife excited about starting this endeavor once we get settled in Tennessee. We plan to be buy and hold investors, so this blog is just what we were looking for. Thank you for taking the time to write it.


  10. That’s a great quote that I’ve never read before– “It’s better to have no deal than a bad deal.” I think people are too willing to jump at properties that aren’t worth their time, just because they’re worried that they won’t find a better one. In relationships and real estate, you should never settle.

  11. I’ve always wanted to own property and rent it out. It just seems like it would be a good thing to do at least once in your life. I’ve been looking into it for the past few months. We live in a good area to rent, there are lots of college kids in the area. Thanks for all the great information about rental property!

  12. Cedric Corpuz

    Solid advise and the getting financing is extremely important, you need to know where you stand and your limits for purchasing power regardless for personal or investment. Additionally, if your using an agent, these days virtually impossible to make an offer without this unless you have an all cash offer…

  13. Angelique Lyttle

    Thanks Brandon! This article is great, I’m looking to purchase in the next two years and I never really thought about multiplexes, the idea of being a landlord wasn’t something I saw for myself, but it would be a great way to generate multiple sources of income and to help pay that mortgage off. I will be reading the other articles you recommended too.

  14. I have a lot of rental properties most cash flow at least 300. If you want some one to help you find a good rental in the area I’m at I’ll help you find the property the realtor and the property manager . I’ll be you eyes and ears on finding a home that will cash flow at 300. or more a month . All I want out of it is to do the renovation at a fair market value I just helped my first client and his is cash flowing at 440. a month if you want to talk to me give me a call at 325-260-6487 I’ll be glad to talk to you. You have nothing to lose but a nice cash flow on your investment.

  15. Shaun M.

    Does anybody have a spread sheet of any kind with everything that you should take into consideration when buying a a multi -unit property? I’m ideally looking to buy a 4 unit property and I want to make sure that when all is said and done I’m bringing home 300 per unit per month. I’m looking for a spread sheet that includes everything. (Taxes, mortgage, insurance, repairs, One month per year vacancy etc.) Mainly I need a form that I can fill in all the information on get the loan from the bank and all the units are rented and it will show me exactly how much I can plan on bringing home each month.

  16. Wave Taylor

    Looking for advice. I did a mass mailing of absentee owners in my area of multiunit properties and got a pretty good response. I have yet to contact any of the property owners. Can anyone give me advice on making an offer of handling this type of situation? Are there any reference materials that some one can refer me to?

    • John Miller

      This is extremely important. Don’t let your dream become a nightmare of a tenants doing. Also you have to be strong emotionally when,it comes eviction time and four little dirty faced youngsters are looking up,at you when you are fixing to serve eviction.

  17. Nancy Orozco

    Hi Everybody I am new to BP and I am currently looking for my first investment property in the Lawndale, Gardena, and Hawthorne area in California. Is there a spreadsheet or detail webinar that would be able to tell me how to evaluate this properties to see if they are a good investment?

    I am working currently with a realtor that is also an investor in duplex properties and I also am concern about finding good deals on multi family units. It seems that the ones that we looked at are all 500K and above and I was wondering if there is a website or other link that I can use to see if these are the best areas to be searching for investment properties?

  18. Thank you for all of these tips. My husband and I are looking into purchasing an apartment and we are still new at dealing with the world of real estate. When we’ve talked about making an offer for an apartment we didn’t even consider the seller financial concessions or the inspection contingency like you mentioned! When we start looking into purchasing an apartment we like, we will consider all of these tips.

  19. Good article Brandon, you certainly should do your due diligence before buying any rental property and don`t be afraid to get advice from people with some experience in this field. And it is important to be a good landlord when you do take the plunge!!

  20. Great advice Brandon. Due diligence on Real Estate is important and if possible, seek out a reputable Real Estate agent that is knowledgeable in the location, mortgage, unit facing and overall architecture / design.

  21. If it is your first time as a real estate investor to rent out your apartment, it might be a wee bit intimidating, however, you should not fret. If you log into Airbnb accounts, you will discover just how much as many newbies there are when it comes to real estate investment and sales, but renting out your apartment is a great training for you towards becoming a better real estate investor.

  22. Thanks for letting us know that we should be sure to have the rental property we plan on buying inspected before the closing date and after we’ve agreed on a price with the seller. My husband and I recently got some money and we thought we would buy a rental property as a sort of investment. We will definitely make sure that, after we’ve agreed on a price for the house, we have it inspected by a professional to make sure everything is good.

  23. Hannah Neilson on

    Considering the average rent in your area when choosing a rental property is a really great tip. I agree that finding out some background information on what you want from a home would be a really good way to prepare. My husband and I have been looking for additional sources of income and have recently been considering rental properties. Before we actually buy one though, it would be smart to do some research on different aspects of the area that we want to invest in.

  24. Lawrence Boan

    Great info. Im not sure where to post this request. This my first post here on BiggerPockets. Recently BP posted an article laying out the different neighborhoods in Indianapolis with that post BP shared a map of the city indicating the different neighborhoods (A,B, C, D, etc). I have rentals in Indy. I also have rentals in Macon , GA. I was wondering if BP had a similar diagram for the city of Macon, GA and if not where would I obtain such a diagram? Thank you for helping this beginner real estate investor.

  25. kira monroe

    I need help in finding a guarantor who I can lend a property through, cause I was put on bad credit and debt by my own adoptive relatives and I am looking for a guarantor that would help me to purchase a rental property.

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