A Beginners Guide To Buying Your First Investment Property

Real estate lovers, and investing enthusiasts, it's that time of the week again!

This week we're going all in when it comes to your first deal.

You'll find a combination of everything we've talked about over the last 3 weeks as well as a specific deep dive into what everyone dreams of...

Profits, cashflow and money!

So, let's take a look! And get started on this week's edition.

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But just before that, let me jump in with something important.

If you are interested in real estate and thinking about making your first investment, why do it alone? I have 1-on-1 coaching for new investors available on my website. Just click the button below!

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Article Number 4, So It Would Only Be Fair...

So this is article 4 of 4 on your first rental property.

Not only will I be throwing another killer real estate tip at you. But I'll also be summarising the content of the last few weeks to give you the best possible chance at success.

This is going to give you the spark notes on how to buy your first rental property, it won't tell you everything you need to know, but it will be a great place to start.

That being said, let's get stuck into the good stuff.

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Let's Take Stock Of The Last Three Articles

Over the last three articles, we touched on some important aspects of buying your first rental property.

That being said I know how hard it is to put everything into motion so within this article we're going to put it all together.

A sure-fire checklist of things to look for when buying your first property.

Starbucks Is Your friend

We want the value of your home to go up.

Starbucks is everyone's best friend (everyone with a tonne of disposable income that is). If you buy near a Starbucks there is a likely chance that business is coming into the area, the people there have a little more spare cash and you'll get a higher quality of tenant. That's not the only benefit though.

At some point in the future that mortgage that you're paying every month will be paid off and you'll own the home, if you purchase a home near a Starbucks chances are it will be worth a whole lot more than you originally paid for it. They do the diligence so you don't have to.

Buy near a Starbucks.

How Do You Find A Home That Will Increase In Value?

Make sure that you look to purchase in an area that will increase in value. Your cash flow (money earned from rental income) is important, but the real wealth generator is the value of the home which is your asset for life.

There are many ways to calculate the value of an area and the potential increase in home values but I want to offer a quick and simple thing for you to look at that could be a large help.

The Freddie Mac House Price Index. (USA)

3 Why's To Use Your Own Money

1. Spending someone else's money is easier than spending your own.

2. Don't become over Leveraged.

3. Learning is vital on your first deal.

In summary, for your first deal... Use your own money!

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Do The Math

This brings me to this week's tip. Do the math.

I know, I know, most of us hate doing math, but don't worry it's not all that difficult. It's a few simple things you have to keep in mind in order to make sure that your first rental property is going to be profitable.

When looking at your first property it's important to list all of your expenses and then the possible income of the property, this will give you your cash flow.

Cash Flow = Total Income – Total Expenses.

Now you know how much cash flow the property will most likely make, but how do you know it's a good ideal?

Time for the basic math!

If you were making $100 per month every month in cash flow, that’s $1,200 a year. That amount divided by a $50,000 investment is 5%.

The real question is, is a 5% return a good deal? And the truth is, it's not.

When buying your first rental property you want to look at cash flow to be at around 10% and 12% of your investment amount. That being said, 10% is on the low end, for your first property you want to look towards a minimum of 12%.

This gives you a small amount of cushion to work with as well as a very decent return on investment (ROI), which will allow you to be able to fund your next deal.

So that's how to formulate whether or not a deal is a good buy!

Thee more you know the better, and the less math we all do in life the better. Am I right?

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Want to know more about investing in your first rental property?

I understand that the process is a little daunting and you might want some more hands-on help.

Don't worry I'm happy to guide you through the process.

Feel free to drop me a message, or take a look at my tailored coaching program for brand-new investors where I help you by taking real estate investing from an idea, to reality.

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So, that's it for this four-part series!

I've enjoyed talking you through how to really optimise and make sure your first deal is as good as it can be!

I hope you not only enjoyed it but learnt a little too.

See you next time!

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