Buying first property to rent out

**Har** · 07-24-2010, 07:55 AM

Hey everyone, first of all, thanks for all the helpful tips and advice. I'm still reading through them.

I've always been interested in rei. Ideally, I think I would want to buy properties that I can rent out. After working for a few years, I think I've saved up enough to atleast start looking around. I want to start small and buy something for around 150k(NJ). I would be able to put down 50k and have 10-20k left to do repairs and pay the mortgage for a few months if necessary.

In my mind it all seems so simple. A couple properties I'm looking at are a couple blocks from the train to to ny(50min) and they are listed for 130k. They are 5 bedroom 2bath and include full basements. I think it should be easy to either rent it out to commuters to ny or college students who could hop on the train for a couple stops. But what do I know? I then wonder to myself, if it's so clear to me, why doesn't the current owner do this? What am I missing?

My other worry is that I'm not connected. I don't know any agents, lawyers, inspectors, or carpenters. How would I be able to find people who I can trust? Afterall, I'm completely new to all of this.

I've made the first step and contacted a local century 21. I'm going to have a sit down with them to see what options are out there and if they fit my goals.

**TeamAguilar** · 07-24-2010, 01:33 PM

You got to get the confidence before investing.
Only after getting certain make the investment.
As far as other owners are concerned may be they are too lazy to work things out

lol
Ask us any doubts and we are here to help out

**Har** · 07-28-2010, 05:45 PM

Thanks aguilar. I'm going to look at a property tomorrow that was recently remodeled. Here are the pros and cons I have so far for this this.

Property 1
Listed 163k
2 floors

Pros
-recently remodeled
-2 floors that have 3 bdrm,1 full bath, living room, and eat-in kitchen each
-currently empty
-close to major highways
-close to shopping/malls, ymca, parks
-looks good from the outside
-going rate for comparable units in area is $1200/month
-full basement

Cons
-busy street
-next to a music store
-listed at 163k which is a bit above my ideal budget of 140k
-15 min walk from the train station(I wanted something closer)
-65 days on the market-This is a big one for me, why has it been on the market that long? What is the seller's motivation?

Also, I just walked into a local 21 and started talking to one of their agents(a younger guy) and he's been providing me with property details and comparables. I don't think this is a buy's agent as another thread suggested? He get's paid by the seller onc ethe sale is made, correct? Did I do the right thing here?

**Har** · 07-28-2010, 06:05 PM

Property 2
Listed 130k
5 bdr, 2 baths

Pros
-just 2 blocks from the train to newark/ny/trenton
-130k
-close to major highways
-close to shopping/malls, ymca, parks
-1 family home could be converted to 2 with town approval( was once 2fam)
-18 days on the market

Cons
-will need a ton of repairs"(Needs full kitchen and bath rehab (1 of 2 baths), exterior doors, light fixtures, sheetrock, painting, roof, windows, and various electrical and plumbing)"-this is very significant because I have no idea how much money this will cost or even how to go about fixing them.
-shabby exterior, will need work too
-unfinished basement
-currently occupied
-has 'as is' on the listing-not sure what that means

Please guys, feel free to share any opinions or advice you may have to offer.

**KamloopsRealEstate** · 04-22-2011, 01:15 PM

Originally Posted by Har

Also, I just walked into a local 21 and started talking to one of their agents(a younger guy) and he's been providing me with property details and comparables. I don't think this is a buy's agent as another thread suggested? He get's paid by the seller onc ethe sale is made, correct? Did I do the right thing here?

You did the right thing. Even though this person is being paid by the seller's commission, he is working on your behalf and is YOUR agent. He is not working for the seller, but is working for you. This means that he is obligated to work in your best interests. Don't be afraid of the fact that the seller's commission fee is where this guy will be paid - that's good because you don't have to fork anything out to pay him (unless you look at a FSBO or something like that.). Just make sure he understands your needs, and go get em!

**James_alex** · 04-25-2011, 11:57 PM

It is essential to first understand how better to be rent out and how it will be beneficial for us further.

**Carla Hailey** · 04-29-2011, 01:12 AM

In buying first property to rent out, you need to understand the essentials of the property. What im trying to say is get some property to rent that has a quality, near of the town and most especially it is a tough house.

**eskyvest** · 04-29-2011, 01:03 PM

You may want to calculate ROI (Return on Investment) to find out what ROI rate you getting from putting that much cash in. Because when the money is in one property, it is tied up to invest in something else. Opportunity cost.

**rduncan610** · 05-01-2011, 05:32 AM

Renting real estate is not a simple business. In the right economic times anyone can do it and look smart, in tougher times even the pros can lose their shirts. You definitely need to read some books on the subject to build your knowledge and use a financial model with reasonable projections to see if the projects make sense.

The people I know who have succeeded in the long run buy properties cheaply and are very disciplined in their operations. It is not an easy business.

**chrisharper** · 05-03-2011, 07:30 AM

Usually the ability to keep it in the objects or the ineffectiveness of the tenant, called the vacancy factor for a quick way you can measure. (Expressed in Percent) as good as a factor of five percent or lower. Representing the 6 days or less, I get the circle area, five percent of the people-rented factor are doing an excellent job in and out of the properties.