Once you find a property, move with intention but remain skeptical until the data is verified.
Use property management software to collect rent electronically and track maintenance requests.
Calculate the Net Operating Income divided by the purchase price to understand the property's efficiency in generating income [5, 15]. 📍 Phase 2: Market Selection and Property Search buying first rental property
Lenders typically require a 20-25% down payment for investment properties, as they carry higher risk than primary residences.
Monthly rent should ideally be at least 1% of the purchase price [16]. Once you find a property, move with intention
Use services like Zillow Rental Manager to run credit and background checks. A bad tenant is more expensive than a vacant unit [20].
For your first rental, prioritize properties that are "move-in ready" or require only cosmetic updates. Major structural or system repairs can quickly erase your initial capital [7]. 📝 Phase 3: Due Diligence and Closing 📍 Phase 2: Market Selection and Property Search
Decide between long-term rentals (stability), short-term rentals (higher potential income, more work), or "house hacking" (living in one unit of a multi-family property while renting the others). Apply the "Rules of Thumb":