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How can I get started with buying rental homes?
We believe that investing with real estate and buying rental homes is the best way that you can invest your money for many different reasons, which I explore in a couple of different videos. If you happen to be asking yourself this question, we applaud you and hope that this video over the next few minutes is informative and helpful for you in your journey towards taking your first step to buying a rental home.
You need to understand why. Why do you want to own a rental property? Why do you want a rental home? What are your goals? Are you looking for cash flow, long term wealth, a combination of the two, because the strategy that you use will be different based on what your goals are. If you don’t need the cash today, but you can see the upside in the future, maybe it could still be a good investment for you, but understanding what your goals are will help you understand what your strategy is, which ultimately will help you understand what type of property and financing and different things that you need to do to acquire that.
The second one is, do you know what to expect? Are you understanding and are you aware of some of the challenges that having someone else living in a property that you own creates? A lot of people will get into buying rental properties, and they get hit in the face with some challenges, some things that they weren’t quite expecting. They get frustrated and they exit by selling their rental property. We want you to be educated and understand what it will be like to own a rental property. That’s why we have some videos that talk about that. If you understand that things will happen: There will be maintenance. There will be a vacancy from time to time. There will be different challenges, and if you’re managing on your own, then you’re going to have management challenges. If you hire it out, then they absorb some of that for you.
There are different ways to buy rental properties. Today, we’re mainly talking about traditional financing. I have a video that talks about ways that you can leverage and what the best way to leverage rentals are. You can buy it with unconventional or what we call creative financing as well, where you can use seller financing subject to the assumptions of loans, lease options. There’s a lot of different ways to buy. You know, hard money loans as well if you’re doing different flips and things like that, but today, we’re talking mainly about traditional. With traditional, you’re going to need to have credit. Now if you don’t have good credit or any credit, maybe consider partnering with someone that does or looking at different creative financing strategies that we can talk about. So credit, number one.
Number two is cash. You’re going to need to have some cash to buy and even to rehab if you need to, if the property needs some work. When you’re looking at a property and want to put 10, 15, 20, 30% down, however much makes sense for the property, then you’ve got to have that cash available. Lender: Partnering with a lender will be critical. A lender that understands investing in real estate, possibly even one that invests in real estate themselves, so they know what you’re needing and they have access to the different loan programs that will make sense for you and your goals.
Then sourcing or finding the properties. You’ve got to be working with either a realtor or real estate agent, wholesalers that you can meet at different investment clubs, as well as looking at auctions and different places where you can have access to different properties. One of the things that we do here at Keyrenters, we actually work with investors, and we line them up with different properties that we have in our inventory to help them acquire those.
Lastly, management. When you have a rental home, it needs to be managed, and it needs a good property manager. That could be yourself, or it could be hired out, and making that decision will be really important in your investment strategy. You’ve got to budget for it. Even if you plan on managing on your own, budgeting for management to either pay yourself or when you need to hand it over, you have it built in. It will be really important.
This are a few things to do in your journey to take the first step to buying your first rental home. If you have questions or would like to explore this with us, feel free to reach out to us. We’re happy to help out.