searching for my first rental property!?

Question

Hello BP community! I have a loan lined up, and I am searching for my first rental property. Any advice will be much appreciated.

Nathan Gesner · Answer

Sorry, couldn't resist.

Your question is a little too generic to provide advice. It's like asking, "How do I play sports?" Are you 13, 96 pounds, with no sports history or are you a 23-year-old collegiate rugby player with a bad knee injury that needs to try something new?

Give some idea of where you are at and what obstacles you're facing and we can give it a go!

Cullum Stirling · Answer

@Hector Salas, welcome! The best advice I've found comes directly from @Brandon Turner himself, define your criteria. Sometimes easier said than done right. Start by doing a little research on the various types of rental properties and strategies, determine which  fits your goals the best. Determine your budget. Determine a market that fits your budget and whatever your rental strategy might be.

Don't be like me and try to look at every type of property that comes up... you end up missing the deals because your search criteria is to broad and top of that I've found by not knowing exactly what you want, you will then procrastinate when you do find a potential deal and in turn end up missing it.

You can do it!

Jody Sperling · Answer

The kind of loan you have will greatly impact what you can purchase. Private money is flexible and would allow more options, but it you have bank financing, try to find the best deal on the market in the best neighborhoods.

A lot of first-time buyers are more concerned with price and pick up headache properties just to jump in the game. While even that strategy usually works in a buyer's favor, it causes unnecessary inconveniences and can slow wealth creation.

Holding great properties forever is a powerful wealth builder.

If your life situation will permit, house hack. Living in and renting a property eliminates one of your biggest sources of liability debt, turning it into an asset. House hacking (living with your renter, whether the property is a house with rent-by-room, or a duplex/tri-/or quadplex) will speed your wealth creation by years.

Best of luck to you!

Hector Salas · Answer

Thank you Micheal. I have a question for you. How’s does one accurately project vacancy percent. Also when unit goes vacant besides rent on that unit, what other expenses are paid with vacancy money set aside?

Michael Robbins · Answer

@Hector Salas I would select an area and house that you would not mind living in yourself, ensure your cash flow allows for a  "margin of safety" that you are comfortable with, project your vacancy and maintenance expenses...

Hector Salas · Answer

Cullum by the way, yes Brandon Turner is the best! I love that guy.

Hector Salas · Answer

Thank you guys for the advice. Nathan by the way, your post was hilarious. I cracked up when I saw it, and yes your absolutely right. So let me tell you guys a bit more of where I'm at, to answer the questions asked. I and my wife are looking for a multifamily home, in Riverside CA, and San Bernardino CA. We are interested in triplex or quadplex. We will be house hacking. I have not decided if we will manage ourselves or delegate to a management company right off the bat. Regardless we will include management cost in the property analysis, just because down the line we will for sure delegate the responsibility. Hope to get some more advice on this information. Thank all of you guys in advance.

Thalia Mena · Answer

@Hector Salas

Hello Hector,

Congrats on that!

Where exactly are you looking?

Kristin Hafner · Answer

Do you have a strategy? House hacking, brrr, buy and hold?

Tony Clark · Answer

@Hector Salas a lot of it depends on what you're hoping to find in a rental property, these questions may help you narrow your search criteria:

1) Do you want a single family, duplex, or multifamily property?

2) Will you be self managing or hiring a property manager?

3) Is your primary goal monthly cashflow or long term appreciation?

4) Where do you have (or where can you create) a team that can make sure your property performs?

I think answering these questions might help narrow your search - I'm an investor/agent in Nashville (moved here from LA, my wife went to school in Riverside), and it helped me realize that my investment journey at this stage is all about creating cashflow - so I invest in 2-4 unit properties in Jackson, TN and Memphis, TN, and own a house hack in Nashville. I'm close enough that I can self manage, and I have a great handyman/contractor who can get to maintenance issues quickly. I wound up moving to Nashville to make this a part of my strategy for the long term.

I'm by no means saying that this needs to be your strategy, but I think that narrowing down what you invest in and where you want to invest will help you build a rental portfolio that will help you achieve your goals. Feel free to reach out if you want to talk more about it, I'm still a relatively new investor and I'm more than happy to share my experience so far.

Best of luck!

searching for my first rental property!?

Most Popular Reply