I am relatively new to investing in real estate and just bought my first home at the age of 23. I've realized it's not a super good rental. What are some thing you look for when buying rental properties? I am not looking to do rebuilding process but instead I'm looking to buy one and have tenants in it ASAP.

Does anyone have tips or guidance on how to start?

@Mark Dutton as with all things real estate... location, location, location. Then look at price, rent readiness, and the type of renter it will attract.

There are people renting million dollar homes, but you know your rental market is going to be smaller. Get to know your market and what people there are looking for. College town, student rentals are usually less expensive and a bit more ‘gardener’ for parties and such. Family area, larger 3-4BR house, nicer kitchen and more than one bathroom, etc.

You don’t want to be the one trying to place a family into a studio apartment or a college student into a meticulously renovated contemporary property.

Mike, where did you go to do your research?  I’m looking at properties closer to home, but I’m having difficulty determining whether my local geography is a good place to have a rental property.  I’ve been poking around on city-data.com as one resource.

@Mike McCarthy

Thank you for your input Mike. What is a good ratio for a rental to buying a house? How much do you want your rent to be versus your expenses?

@Daryl Henry I really just started to get to know areas of the city that I wanted to buy and hold. You can tell a lot just by driving around - but I also enlisted the help of a realtor. Went to see open houses, checked out all the houses for sale on Zillow, and saw what's out there.

@Mark Dutton There's a lot of discussion about the 1% rule. A $200K house (including any reno costs if needed) should have a rent of $2,000/mo. It's real easy, but also a bit dangerous. You need to run the numbers (BP calculator or similar) for 10, 20, 30 houses and see how it works for you in your area. It depends a lot on local factors like taxes, and whether you're buying an older house that will need capex, or a newer house that most capex is deferred for 10-15 years. For me, I'm happy in the 0.85% - 0.9% range, it works for me in my area. If I invested in CA, FL, or NJ, I'm sure that would be in the 1.3+ range due to taxes, insurance, and other costly requirements for rentals.

Originally posted by @Mike McCarthy :

@Daryl Henry I really just started to get to know areas of the city that I wanted to buy and hold.  You can tell a lot just by driving around - but I also enlisted the help of a realtor.  Went to see open houses, checked out all the houses for sale on Zillow, and saw what's out there.  

@Mark Dutton There's a lot of discussion about the 1% rule.  A $200K house (including any reno costs if needed) should have a rent of $2,000/mo.  It's real easy, but also a bit dangerous.  You need to run the numbers (BP calculator or similar) for 10, 20, 30 houses and see how it works for you in your area.  It depends a lot on local factors like taxes, and whether you're buying an older house that will need capex, or a newer house that most capex is deferred for 10-15 years.  For me, I'm happy in the 0.85% - 0.9% range, it works for me in my area.  If I invested in CA, FL, or NJ, I'm sure that would be in the 1.3+ range due to taxes, insurance, and other costly requirements for rentals.

Mike, just wanted to chime in to say that CA has the 16th-lowest property tax rates and 2nd-lowest homeowners insurance rates in the country, so I'm not sure why you're bumping up your 1% rule for CA!

Originally posted by @Jon Schwartz :

Mike, just wanted to chime in to say that CA has the 16th-lowest property tax rates and 2nd-lowest homeowners insurance rates in the country, so I'm not sure why you're bumping up your 1% rule for CA!

 My bad and thanks for the correction Jon!  I stand by my NJ tax statement though (having lived there).  :)