First rental property

7 Replies

Originally posted by @Bradley Babineaux:

Hello. I am looking into buying my first rental. What should I be looking for price wise that clarifies a good deal? Thanks

 That question is completely subjective and would vary by market.  I suggest getting a good agent first :

Then reading these guides:

You should figure out how much you can spend. That'll help you determine your upper price limit.

Once you know that, the price itself isn't that important - what IS important is the price to income ratio. So you could have a $50k house that rents for $1k/month, and that would be a good deal. You could have a $500k house that rents for $1k/month, and that would be a terrible deal.

A lot of investors use the 1% or the 2% rule, which are really just general rules of thumb. They can be very helpful though, and they work like this:

If the monthly rent is 1% of the purchase price, then it might be a good deal.

So for the simplest example, if you can find a $100k house that will rent for $1k/month, that could work.

In some markets, like mine, it's even possible to find 2% deals. And that's a pretty safe bet.

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The list price probably does matter. Of course you can negotiate, and that might go well or it might go badly.

To find out how much the place will rent for, check out and you can get a pretty good idea! Also, definitely use the BP calculators under the "tools" tab at the top of this page. That should get you oriented properly.

I disagree.  The 1% or 2% rule are irrelevant and have no bearing on the profitability of the property.  You need to go much deeper with expenses to determine if the property would be profitable, a good agent can assist you with that.

Whether or not a rental property is a good deal or not only takes into account the price of the property in relation to the income it brings in. There's no way to determine if a property is a good deal or not just based on the price. You have to run cash flow numbers-
Then there are other factors that determine if a property will make a good rental. Mostly, are the numbers you project sustainable? Tenants matter, quality of the property matters, and location matters.