15 Tips on Investing In Rental Properties For Beginners

Kreg Bale
Kreg Bale November 22, 2019
Updated 2019/11/22 at 12:40 PM
Investing in Rental Property for beginners

This article explains how to start investing in rental property for beginners. Buying your first rental property is a key investment and if you manage it well, it could become a lucrative one. However, you should take care as many professionals rightly advice. Besides, you must do your research, among other important things like using leverage, investing in single-family homes, knowing where to look and getting a good mortgage provider and so on. Read these tips from top industry practitioners in the real estate business.  Here is a list of 15 tips for investing in rental property for beginners.

Investing in Rental Property for beginners

Tips on investing in rental property for beginners

  1. Use Leverage to Buy the Property

Leverage in investment language is simply using borrowed money to buy an investment. Also, You should learn all you can about the mortgage market. Because getting the right mortgage will reduce your costs and remove uncertainties about the property’s cash flow. So using the leverage of a mortgage will free up money for repairs and maintenance costs. But be careful because borrowed money could pose its own problems of interest and repayments.

  1. Line up your financing early

Investing in rental property for beginners involves having good financing options early. Measure all your financing options carefully if you want to buy your first rental property using a mortgage. consider if you should choose a fixed or adjustable interest rate or a 15 or 30-year mortgage. Also, you may use Lendingtree.com to get the best interest rate. So fill a form and allow many lenders to fight to grant you a loan.

  1. Invest in single-family homes first

Investing in single-family homes first is a good way to start as a new real estate investor. The reason is that, maintaining it is easier than that of multifamily or commercial properties. Since you have one tenant, there will be fewer damages to the property. Also, when something breaks you will fix just that thing.

  1. Invest enough to have a positive cash flow

Investing enough to have a positive cash flow, is a wise tip of investing in rental property for beginners. So, to increase your success rate, have enough money you can use for emergencies. This also enables you to hold the property long enough during a downturn in the market so that you sell at a profit later. Also. You need money to live on while you wait for a turnaround of the economy.

  1. Invest in turnkey real estate

You can buy Turnkey real estate with tenants and property managers. This means you will have rentals immediately and you have a manager to handle those annoying phone calls at 2 am in the morning instead of you. Look for these types of properties and invest in them. Visit roofstock to learn more.

  1. Focus on your return on investment

Another tip for investing in rental property for beginners is to focus on your return on investment. Buy properties in an area that will give you a cap rate of 7 percent or more. Get these deals in places that are developing fast or in gentrified places. Also, to get the highest return on your investment, know the location well and learn about the rate of houses in that location.

  1. Know your marketing strategy

If you buy a vacant property find quality tenants to live there. And before you buy a property, have a plan for marketing it. Also, look for major online real state advertising platforms to market your properties. If you do that, you will have a plan in place and will not be confused.

Investing in Rental Property for beginners

  1. Buy what you know

The next tip for investing in rental property for beginners is to buy what you know. Buy properties in a location or niche you know well. Also, use your life experiences to gain an edge in the market. For example, f you are a retired military officer, buy a rental property near a military base that will cater to military transfers.

  1. Have a written lease in place

Make sure your lease agreement is clear and without any ambiguities. This will enable the tenants to know their expectations. Include the following in the lease. When the payments are due, termination fees and if you allow pets in your property. Also, include requirements of cleaning by tenants and that heat should be at a particular temperature during winter.

  1. Screen the prospective tenants thoroughly

This next tip on investing in rental property for beginners is to Screen the prospective tenants thoroughly. Your returns on investment depend on a good tenant. So try to get a good one. Vet all potential tenants. You can also use the free online website like MyRental to check your prospective tenant’s addresses, criminal background, and eviction history.

  1. Talk to the neighbors

Go to your future neighbors and explain to them that you are about to buy the property. Ask them about the owner of the building and if they had any problems with the tenants. Also, drive around the property and examine it well during the day, weekend and in the evening to find out more about the location.

  1. Work with a property management company

Think about your time and see if you can handle calls late at night to fix something that stopped functioning in your property. And if you cannot, then, get a property manager to help you take maintenance calls, interview tenants and do background checks. Before you hire a manager, confirm if the fees are fair.

  1. Buying a property with outdoor space

Another tip for investing in rental property for beginners is to consider buying a property with outdoor space. Many tenants would like to live in a cozy place where they can relax and invite friends over. So buy a property with enough usable space and where tenants could plant a flower or put furniture and decoration.

  1. Buy a multi property that you can live in

If you want to buy a multi-property and are willing to live there, get an FHA mortgage. This mortgage provides the best arrangement of interest rate and down payment size. For two- to four-unit properties, Federal Housing Administration (FHA) mortgage rates are generally one percentage point lower than any conventional rate for the same type of properties. Also, the down payment required for the FHA property is a mere 3.5 percent against 25 percent or more for conventional lenders.

Investing in Rental Property for beginners

  1. Accept rent payments online

You can accept Rent Payments Online. To avoid stories where a tenants check gets lost in the mail, set up online rent payment. This will make some of the tenants set up regular automatic payments. You can check out companies like Avail. They also offer a complete property management software that market properties, screen tenants, organize leases and plan maintenance. And you can try the service free for 30 days.


In this article, you got tips for investing in rental property for beginners. You need these tips to start investing, manage real estate properties and make sure you succeed in this business. Examine them and take action today.

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