Updated: Nov 15, 2021
“I want to invest in rental properties, but I don’t know where to start.” This is a phrase I hear all too often. I am a very accomplished procrastinator/excuse-maker myself, so join the club.
You’ve heard me say this before: rental properties are one of the best tools for building long-term wealth, and I genuinely believe everyone should own them. Why? Four reasons:
Cash flow – I’m talkin’ about that passive income, baby! You can make a few hundred bucks per month with very little (sometimes no) work.
Equity buildup – your tenants are paying your mortgage for you. That means after 30 years, you own a property free and clear having only paid the down payment. Dope.
Tax benefits – property owners enjoy certain tax deductions
Potential appreciation – if the value of the property increases, that’s even more equity and wealth you are building!
Here’s the thing: you don’t have to invent the next iPhone to become wealthy. You just have to invest in rental properties. Rental property investing is the everyday woman’s way to achieve financial independence – believe you me (as a good Southerner would say).
Anyways, I’m writing this my good friend texted me yesterday. She was very frustrated with herself for not taking the first step to invest in rental properties. She listed many reasons why she was holding herself back. And I KNOW many of you feel the same way (because I get this question a lot).
HOW DO I GET PAST THE FEAR?
My friend brought up several reasons she hasn’t taken the first step, so allow me to destroy these one by one.
Obstacle Number 1: It’s hard to find properties I’m interested in, where the numbers work and the level of attention is doable.
I agree completely: it is hard and this is where most investors get stuck. Sometimes you can find deals on the MLS (Multiple Listing Service), and sometimes it will take more grunt work. I’ve had luck with the MLS (partly because I have my real estate license, so I am the literal first to know if a property gets listed that meets my requirements.) But most don’t have that advantage.
With the MLS, you gotta be patient. Don’t settle. It took me almost a year to find and actually close on my first duplex, and that was after making several offers and even having other contracts on properties fall through.
The reality is that most good deals are off-market properties. If you’re not finding deals on the MLS, and you want to speed up the process, take a few minutes to look up these other creative ways to find investment properties:
Short sale and pre-foreclosure leads from agents, attorneys, or lenders
Foreclosure or tax dee