How to Buy Rental Property

Tips for buying rental property

1. First things first-figure out where you want to purchase a rental property! Many people purchase properties in summer resort areas, others in cities and suburbs. The choice is yours. Also figure out which type of property you want to purchase (home, apartment building, condominium, etc).
2. After you've figured out where you want to purchase, it's time to start shopping. It's recommended that you enlist the services of a real estate agent whose specialty is commercial properties. Also check out the classifieds in your newspaper, and do searches online.
3. Definitely set up a budget for yourself. If you buy a fixer-upper, you probably won't spend too much money initially, but once the property becomes yours expect to shell out a lot for repairs. If you buy a fixer-upper, bring a knowledgeable contractor in with you for an estimate on repair costs.
4. Look into getting pre-approved for a mortgage. Understand that mortgages for investment properties are very different than residential property mortgages, and that the down payments are often enormous.
5. Hire an attorney to help you draw up any papers necessary for the purchase. You should also sit down with a numbers person (that is if you aren't one) and figure out whether or not the income you derive from renting the property covers the costs of owning it. Also be sure you're making a profit after ownership costs are covered!
6. Settle the sale of the rental property with the property's owners or the real estate company negotiating the sale. Inquire as to whether or not they'd be willing to cover some of the closing costs on the property. Once the property is yours, begin interviewing potential renters, and consider hiring a repairperson or landlord to handle the day-to-day business of the property (this won't be applicable to all rental properties).

Caution

Be absolutely sure you have the property fully inspected before purchasing! You may want to consider having it appraised, too.

Where to buy rental property

Below you'll find some terrific places on the Web for locating rental properties for sale all across the U.S., as well as in other countries--

You'll find over 2 million homes for sale using REALTOR.com. Search for property by city, state, zip code, price range and number of beds and baths.

LoopNet allows you to search for rental properties for sale, or to advertise one! There are over 290,000 commercial lease and sale listings in their database, all of which you can access when you become a member.

The residential and commercial real estate company RE/MAX has an easy-to-use site that allows those looking to invest in a rental property to look for property or to find a commercial agent to aid them in their search.