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In today’s video, we’ll be speaking about the 12 steps that I used before purchasing my first rental property. These steps were paramount in the success of my first property transaction and can be applied to all investors. Make sure to follow me on Instagram: Griffin Milks
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Here are the steps used to buy your first rental property:
Step 1: Save up for your downpayment. When buying your first property, I tend to recommend using an owner-occupant loan, with as little as 10% down. This allows you to leverage your capital quite a bit more, lower the time needed to save, and increase your potential return on investment.
Step 2: Getting your credit in order. Unless you’re paying for your property in cash, you’ll need to take out a mortgage loan on the property. This means that you will require good credit to secure a good interest rate and even get approved at all. Pay off your debts, clean up your loans, and increase your credit score.
Step 3: Talk to a mortgage broker and get pre-approved. Using a mortgage broker will save you time and grief for finding the best mortgage. This person will also help you get approved for a loan and steer you in the right direction. A pre-approval letter can be an asset to include in your offer.
Step 4: Start searching for properties and have a strategy in mind. Try to analyze as many properties as you can on the internet and then visit a couple dozen properties in person to get a good idea of the market and what’s available. In this step, we also speak about whether or not I purchase my properties in a corporation or not.
Step 5: Find a competent real estate broker. This individual will know the ins and outs of closing a deal, and what needs to be done in a contract. This is one of the most important steps in successful property business.
Step 6: Find a property that only needs cosmetic repairs. I would recommend doing as many of these cosmetic repairs as possible yourself when you are first starting out to save on cost and gain some experience.
Step 7: Determine the cash flows and ROI of the property. I prefer to use an online calculator to quickly calculate the cash flow and return for a property during my online research process.
Step 8: Place offers that make sense! I like a deal to make a MINIMUM of 15% cash on cash return in the first year. And then tack on to that all of the mortgage paydown and forced appreciation. This is because if the deal will give me a 10% return total, for the amount of time and effort I’d rather just put it into the S&P 500 and let it grow.
Step 9: Inspection of the property. A building inspection is also paramount to uncovering certain issues that you can’t see for yourself.
Step 10: Renovate your property. If the units are vacant, do the cosmetic repairs asap. If the units are rented out to tenants, wait until there is tenant turnover.
Step 11: Rent it out. Make sure to use professional photos on your listings and respond to applications in a timeline manner. This is the time to be very selective of your tenant. I use Facebook marketplace mainly.
Step 12: Rinse and repeat. Continue saving for new properties, which should be quicker since you’re paying down equity and could be saving the cashflows.
If you enjoyed this video, make sure to give it a like and subscribe to the channel for more investing content. My goal with this channel is to help all my viewers get one step closer to financial independence. Follow me on Instagram and TikTok: Griffin Milks
#realestate #rentalproperty #investing
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Disclaimer: This video description contains affiliate links, meaning that if you click on a product link, I may receive a commission at no additional cost to you. I do not promote products, services or companies I have not personally used or those which I do not recommend. All opinions are my own.