When To Buy Your First Rental Property – Motley Fool

December 13, 2021 by No Comments

Deciding to invest in your very first piece of rental real estate is the first step toward generating a passive income and creating long-term wealth. The journey to building wealth can be quite difficult and should not be taken lightly. Before investing your hard-earned cash into a rental property, a wise investor needs to have a plan. Having a well-mapped-out plan will help mitigate some of the risk.

Continue to read below to learn what elements should be included in your plan!

Identify the type of rental property you want to own 

The world of rental real estate is vast; there are a variety of properties that are up for grabs. From apartment buildings to trailer homes, investors have a wide range of choices when it comes to the types of properties that can be acquired. Given this fact, before diving into the wonderful world of rental real estate, it’s a must to know what type of property you want to acquire.

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Pursue knowledge of the industry

Once a definite decision has been made about what type of property you want, the next step is to gain as much knowledge about that particular sector of the rental real estate industry. If you’re wondering what type of content to start consuming, this article might be a good place to start. Regardless of the type of rental property owner you decide to become, knowledge of the industry is a must!

Create a budget

Once you’ve gained some industry knowledge, the next step is to create a budget. The great thing about hopping into the rental real estate market is that your budget does not have to be big. When it comes to buying a rental property, you don’t have to buy the next feature for Netflix’s World’s Most Amazing Vacation Rentals. It’s fine to start small, like with a trailer or even a condo. 

Get preapproved for a loan for your investment property

After creating a budget, the next step of the plan is to try to get preapproved for an investment loan. Getting loan preapproval for your investment property may come with a bit more legwork, but the good news is that investors can explore several loan options. Investors can get conventional loans, hard money loans, private loans, or home equity loans. There are many options to explore, but don’t miss out on the important step of preapproval; it will help guide your purchasing decision. 

Start researching properties online

After being preapproved for a loan, the next step is to conduct an online search for properties within …….

Source: https://www.fool.com/real-estate/2021/12/13/when-to-buy-your-first-rental-property/

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