I am new to the site and new to real estate investing. I am a financial analyst by trade, but I have always had an interest in real estate. Specifically, a partner and I have made the decision to invest in some rental property. While we have not bought our first investment yet, we are looking to get "all of our ducks in a row" so to speak, so if anyone has any advice for anyone starting out I would greatly appreciate it.
To share more details about our goals, we plan to purchase a 2-3 unit multi-family property, with 2 bedrooms per unit. We are looking for a purchase price of approx. 100-150k, with 20% down and have set aside an additional 10k for repairs. We have our target markets identified and know the market prices for similar rentals in the area(s). Once acquired, we plan to hire a local property management company to handle the day-to-day/emergency management.
Once again, if anyone has any general advice or learned lessons please feel free to share. I look forward to hearing from you!
welcome to the site jason
@Jason King - My thought after reading your post is why not manage the property yourself and save $? It could be a great experience and you'll learn a lot. Welcome to the BP and I wish you the best!
@Jason King Welcome to BP.
My biggest advice, make sure the numbers work! So many people buy rental properties when the cash flow isn't there because they don't realize how to know if cash flow will come from it or that cash flow even can come from it. Know how to run numbers, make sure there is a nice margin of cash flow expected, and make sure you hire a property inspector to ensure the true condition of the property so there will be no secrets. If there does need to be work done, get real estimates to go off of, not guesses. A lot of people like guessing and estimating unnecessarily in this business for some reason.
The numbers are most important and I think one of the biggest things people don't understand. But after you get the numbers, understand that there are more factors that go into what makes a good property too. But start with the numbers :)
Thanks for the responses.
Re: Michael Hable
There are a few reasons I am hesitant to manage the property myself. I have a demanding full-time job and a 18 month old at home, so my free time is limited. Managing property may make more sense over time, as I learn more about what is involved in the process. For now, I want to stay conservative in my financial calculations and include the cost of a property manager. If I decide to manage the property in the future that will just be additional profit.
Re: Ali Boone
Thanks for the advice! I am no stranger when it comes to numbers, as I work as a financial analyst. I am planning to utilize BP's "Buy N Hold" calculator as a starting point for property evaluation. Do you have any experience using this tool? Is there anything missing?
I would add that you should start networking and interviewing property managers now. You need to find someone you trust and who knows your area well. You might even get some leads from them, because PMs often know people looking to sell and get out of the rental business.
Learn about their fees for initial leasing and ongoing management, because it adds up and you'll need to factor that into your evaluation.
For new investors, my belief is that hiring a professional property manager is money well spent. They will have solid contracts, processes and most importantly, experience to guide you along the way. There's no end to unusual rental situations you'll deal with, believe me. Even though they manage, you're still the decision maker.
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