The 5 Things To Look For In Your First Rental Property

In Real Estate by admin

 What key factors should new real estate investors look for in their rental properties?

It’s important to make smart choices and avoid common pitfalls, especially when just getting started in real estate investing. From, Shark Tank investor Barbara Corcoran spills some of her advice for selecting your first rental property.

The Top 5 Things to Look for in Rental Properties 

1.Choose a Good Starter Property

You probably don’t want to take on an incredibly complex rehab project as your first property. Sure, distressed properties can yield extra profit. Yet, when you get started you want to get in and start getting money back and gain confidence and experience. Look for something you can confidently handle. Then build on that.

2. Know the Legal Stuff

One of the big dangers that is a special risk for new rental property investors is the legality of rental units. Many owners have illegally converted rooms or have subdivided homes to make them appear as multi-unit rentals, with far more cash flow. However, many banks won’t finance illegal properties, and new owners can be hit with heavy code violation penalties, fines, and daily interest.

3. Location, Location, Location

Understand what makes a property valuable, and how even a different block, street, or community boundary can affect that, even if two properties are very close on the map.

4. Double Check Your Rents

Sadly, you just can’t take a seller or real estate agent’s word for the rents. Don’t rely on nearby rental asking prices, or even leases provided by the seller. Find out what comparable rentals are actually leasing for now. Verify the leases with tenants, as well as their status. Are they on time with the rent, or months behind?

5. Use Leverage

Barbara Corcoran reminds us that often “people with money don’t have time, people with time don’t have money.” Help others by using their capital to finance your deals, and lower your risk, and increase your speed of growth at the same time. Do this by partnering up, or using rental property loans.