Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 204 posts · 70 votes
Actually there are deals everywhere but some take a little more work to find.
Smart investors have the money to cover closing, keep reserves, cover the first couple of months expenses and to cover the down payment which is variable. Investors don't always need a loan, but when you do, figure the cost of money at each interest rate so you stress test the deal. Keep in mind there are different tax rates and different insurance rates depending on where you buy, what you buy and how you buy.
For instance buying off the MLS is the most expensive but you may feel you need the comfort level. While buying creatively "of market" will be the cheapest, but you need some guidance to do so.
There are always deals, there just aren't always people who know how to put those deals together.
Make a list and start gathering:
Pick an area find out the "average" price you are considering then track down
title costs
escrow cost
any transfer costs
what the property tax will be after you buy
any HOA fees/special assessments
cost to prepare the property for renting
utility costs
lawn care/snow removal
repairs/improvements
You'll soon see that it's better to know up front what your true costs are
That's a good list for a "held rental". We cut through that kind of long term worry by offering the property to end buyers as a Lease Option. The optionee covers those costs. There are a lot of ways to build an investing approach. I hope you don't get overwhelmed. Sometimes it cuts years off the path by being guided through the process.
John, your list is a good starting point, and I would group those costs into three buckets so a beginner can budget them. First is the cost to buy: down payment, closing costs, title, escrow, transfer costs, and any prepaid taxes and insurance. Second is the cost to get it rent-ready: repairs, cleaning, appliances, and any work needed to pass inspection. Third is the cost to hold it: mortgage, taxes, insurance, utilities while vacant, HOA fees, and a reserve for the first vacancy or repair. I would ask a local lender and agent for the actual numbers on a specific property, because the same list can add up very differently from one home to the next. Knowing the full picture up front is what keeps a first investment from turning into a surprise.
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 204 posts · 70 votes
John, your list is a good starting point, and I would group those costs into three buckets so a beginner can budget them. First is the cost to buy: down payment, closing costs, title, escrow, transfer costs, and any prepaid taxes and insurance. Second is the cost to get it rent-ready: repairs, cleaning, appliances, and any work needed to pass inspection. Third is the cost to hold it: mortgage, taxes, insurance, utilities while vacant, HOA fees, and a reserve for the first vacancy or repair. I would ask a local lender and agent for the actual numbers on a specific property, because the same list can add up very differently from one home to the next. Knowing the full picture up front is what keeps a first investment from turning into a surprise.
Indeed, there is a lot more to the story and that is usually best covered one on one with a specific property. ;-)
John's list is the part most new investors skip, so it's a solid place to start. One piece that still catches people at closing is the loan itself. On a DSCR purchase, the lenders I shop commonly want 20 to 25 percent down, and most also want reserves verified on top of your cash to close, often 3 to 6 months of the new payment left in an account after you close. That money isn't spent, but it has to be there and it has to be yours. Then there's the appraisal, which is usually paid up front, plus origination points or fees on the loan. So the check you need to have is bigger than the check you write. Budget cash to close plus required reserves, not the down payment alone.