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

Johnston Investor Being Handed a Set of KeysAcquiring your first Johnston single-family rental property can be quite the experience. Still, with every investment come risks. Let’s make sure that your first investment property purchase in Johnston is profitable! Before making that decision to buy, go over these helpful details. By recognizing the value of the insight being provided, you can feel a sense of security with your first rental real estate purchase.

A key feature to the success of owning a single-family rental home is clearly defined end goals. Make sure to have this in mind before you make your purchase. Examine the different qualities to be considered in an investment property. This will save you a lot of time when you finally decide to begin a property search. For instance, your search might be for properties in a certain area, with a specific number of bedrooms, or minimum square footage. By knowing the specifics, you can refine your search criteria and locate potential properties faster.

To be certain of what qualities you are looking for is just as important as it is to be financially prepared to purchase an investment property. Before searching for a property, make it a point to settle personal debts and then save up for a down payment, as per industry experts’ suggestions. Since all mortgage loans for an investment property will require a 20% down payment, you might want to consider applying for more favorable loan rates. To qualify, you would need to have had reduced personal debts. It’s always good to be one step ahead in planning your finances, but be cautious of high-interest loans or mortgage products that seem a little too good to be true. By prequalifying with a reputable mortgage lender, you will be ready to seize the investment opportunities as they arrive. By making financial readiness a priority, you can more confidently buy that rental property when the time comes.

Once you’ve taken into account all of these important preliminary steps, you can start looking for the right property. In the pursuit of searching for the right property, do not neglect to run a series of numbers on each prospective property, including your margins, operating expenses, and expected return. All too often, new investors falter due to a lapse of judgment in this area.

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

Don’t get too caught up in it all — remember, an investment property is just that, an investment. Getting attached to a particular property or allowing emotions to guide your decisions is not a good idea. Also, the property you buy is not necessarily a property that you would ever live in yourself. For your first investment, industry experts recommend opting for low-cost properties in high-demand areas. You can do without fixer-uppers. Only consider them if you are competent at home remodeling or if you are well connected with quality contractors who are willing to do the work for less than the going rate. The aim is to use your first single-family rental property as a platform for obtaining a long and profitable investment career. Consequently, this keeps you guided and steady, as you keep your investment properties profitable.

The best thing to do when you’ve found your perfect investment property is to find yourself a competent Johnston property management team. Contact Real Property Management Providence at 401-272-3300 now.

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