There are a lot of gurus on real estate investing. They make it seem that only they know how to buy real estate as an investment, and if you buy their (very expensive) course or webinar, or attend their exclusive meetings (for a monthly price), you will know their secret to being successful. However, there is only one real secret to being succesful in purchasing rental property. You just have to make sure that you buy it right. Buying it right is the “secret.”

Your first step to buying investment property right is to make sure the property is in an area desirable to tenants and suited for appreciation. Next, you want to purchase the property at a price and financing that will allow you to make a profit (and positive cash flow) while renting it out. You will have to include any fix-up expenditures for getting the home in rental shape in your calculations. You’ll need to create a budget of your expected rental revenue and all costs associated with owning the home – and be sure to allow for contingencies such as vacancies, unexpected repairs, maintenance, taxes, HOA fees, and insurance.

The best way to determine whether or not a potential rental home will make a profit is to seek out the assistance of a competent Realtor. Your Realtor will help you find the home, determe its present and future value, and help you make the calculations you need to determine its profit potential.

Also, you will need to determine whether you’re going to manage the property yourself, or pay a management company. We definately recommend a management company, since they will be able to get you good paying tenants for you home. They will also know the laws and regulations (federal, state, local) regarding landlords and tenants and have the documents and processes to make dealing with tenants, repairs, and the ongoing management of the property more convenient for you. This is especially true if you work a full-time job.