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5 Tips for Buying Your First Rental Property

Rental Property - Milbrook Properties - NYC

Are you thinking about purchasing an investment property? Investing in your first multifamily residential or commercial real estate property can be an overwhelming experience. In order to find a property with a high ROI, you need to know about mortgage loans, leasing, landlord and tenant relationships, property management, and have strong decision-making skills. Here are five tips to make your first rental property investment process easier.

1. Do Your Research

Purchasing a property and renting it out isn’t the recipe for success. You need to do your homework and plan how to execute it. Ask yourself the following questions:

  • Do I want to invest in a single-family or multifamily property?

  • Do I have a price range in mind?

  • Will I manage the property myself or hire a property management company?

In simpler words, before investing in multi-family residential properties, you should clearly know your investment goals and how you plan to achieve the milestones.

2. Make an Investment Business Plan

Investing in real estate requires you to contribute a significant portion of your savings. Therefore, the last thing you want is for all of it to go to waste. Not having a plan is one of the biggest mistakes made by entry-level investors. Make sure that your real estate investment business plan has the following:

  • A mission statement

  • Measurable and clear goals

  • SWOT analysis

  • Income goal calculations

  • Implementation plan

  • Marketing strategy

3. Select the Right Financing Option

Even if you have the funds to purchase a commercial real estate property, it is in your best interest to take out a mortgage. Compared to investing your savings in buying real estate, using a mortgage gives a higher ROI, maximizes cash flow, and helps you stay prepared for unexpected repairs. Therefore, it is essential to look at all financial options and choose the one that best suits your needs.

4. Choose the Right Type of Rental Property

Buying a rental property doesn’t mean purchasing a single-family home and giving it up for rent. Instead, you should browse the market and invest in a property that goes well with your investment strategy and budget. For example, you can either give a multifamily residential property on rent with a 12-month lease or purchase an office building and rent it to a company to earn more rent.

5. Work with a Property Management Company

While most first-time landlords and investors decide to maintain and manage a rental property themselves, the do-it-yourself approach can cost you hundreds of dollars in the long run, especially if you’ve got no experience investing in commercial real estate such as shopping centers and office space.

From making repairs you aren’t familiar with to building a relationship with tenants, trying to do it all can take a toll on your multifamily residential property. Contact Milbrook Properties today more information on our property management services.

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