Skip to Content

Purchasing Your First Rental Property? Here’s What You Should Know

New homeowners admiring their first property purchaseIt can be a thrilling experience to purchase your first Johnston single-family rental property. Yet, as is the case with all investments, there are certain risks involved. To ensure that your first investment property purchase in Johnston is as fruitful as you hope it will be, there are a lot of aspects you must understand before buying. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property do you want to deal with? How will you finance your purchase? In what follows, we will discuss these concerns and other key details you’ll need to know to make purchasing your first rental property a rewarding experience.

Define Your End Goal

When getting your first single-family rental home, one of the first things to take into account is to set clearly defined end goals. Before starting your property search, you should spend some time determining what qualities you are on the hunt for in your investment property. As an illustration, you might be browsing for properties in a particular area with a specific number of bedrooms or minimum square footage. You may also target a certain renter demographic, such as college students or retirees. Learning the basics allows you to refine your search criteria and locate potential properties faster.

Prepare Your Finances

Along with learning what qualities you are looking for in a property, it is crucial to prepare financially before purchasing an investment property. Industry experts recommend paying down personal debt and saving for a down payment before starting your property search. Reduced personal debt can help you to qualify for more favorable loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Planning to finance in advance is one more important step, but be careful of high-interest loans or mortgage products that seem too good to be true. By prequalifying with a competent mortgage lender, you will be able to capture investment opportunities as they occur. By prioritizing financial readiness, you will be in a better position to purchase that rental property when the time comes.

Crunch the Numbers

After taking these vital preliminary steps, the search for the right property can begin. One critical factor to consider during your search is that you should run a series of numbers on each prospective property, including your margins, operating expenses, and expected return. This is where several new investors commit grave errors.

New investors need to remember to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.

Stay Objective

It is best to keep in mind that an investment property is just that, an investment. Getting attached to a specific property or letting your emotions dictate your actions is a bad idea. Plus, the property you buy is not necessarily one you would ever live in yourself. Industry experts urge you to select low-cost properties in high-demand areas for your first investment. But you should fixer-uppers unless you are a highly skilled home remodeling expert or know a good contractor who would complete the work at a lower going rate. Your first single-family rental property should be seen as the first step toward a long and profitable investment career rather than the end goal. Hence, you can keep yourself on track and your investment properties in the black.

Design a Management Strategy

In conclusion, don’t forget that acquiring a rental property is just the first step. To ensure your investment pays off, you need a proactive management strategy. This is when the assistance of a Johnston property management company can be valuable. As local market experts, property managers can help you find off-market investment properties, analyze market conditions, set rental rates, and many more. As more experienced investors will testify, the right property management company is an indispensable partner for profitable rental property investing.


Once you have discovered the appropriate investment property, be sure to employ the most qualified Johnston property management team. Contact Real Property Management Providence at 401-272-3300 now.


Originally Published on March 13, 2020

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details