| by Kenneth Chase | No comments

How to Buy a Rental Property


How do I buy a rental property? Let’s get into it. Hey, there. I’m Clayton Morris, the founder
and president of Morris Invest. We’re the largest turnkey
rental provider in the country. And we’re so excited to have
you back for another episode. Today I want to talk
to you about how to buy a rental property. It seems like a
simple enough question but it can throw
off a lot of people. You hit some speed bumps
along the way and you think, am I doing this right. Well, I’ve mapped out
seven different points here that I want to take
you through on how to buy your first rental property. Let’s start with number one. First of all, I
think people always want to start in the
middle somewhere. And you need to define
what it is you want. So step one is define
what it is you want. What are your goals? You want to find out,
well, what state do I want to buy the property in. Do you want to buy it
in your own backyard, or do you want to invest
across state lines? So you need to first set
your goals down on paper. How many properties do
you want to acquire? What is your goal for
real estate investing? Without a goal, you’re going
to wander off the path. You’re going to start thinking,
maybe I should flip houses. Maybe I should– I
don’t know, get involved in mobile home investing. Whatever it is, if you
don’t have a clear goal when you start out
then you are going to go off the beaten path. So step one, have a clear
goal, write it down, and then it will start
to come to fruition. It’s pretty amazing
how that works. Step two is to
find the property. And there are multiple
ways to find a property. OK. The most obvious way is
to contact a real estate agent in the market you want to
acquire this rental property. And you want to be
specific in what you want and what are you are looking
for in this property. And we’ll get to step three in
a second, which will give you some better numbers here. But you could reach
out to a realtor and let them know what
your intentions are, how much money you’re
looking to spend, and how many rental properties
you’d like to acquire, and get that person
on your team. You probably will have to go
through quite a few realtors before you find one that
is a good fit for you. Sit down. Go to lunch. Go sit down over coffee. And have them print out
some different listings and kind of go through those
numbers and see if any of them are a fit for you. That’s one way to
contact a realtor. Another way is to simply pick
up the phone, which is something that I would do, trying to
find off market properties, ones where you can
actually get a higher return on your investment,
where you’re not going to have to deal with a realtor. My father’s a realtor so I
have nothing against them. It’s just that you are going to
get a higher bang for your buck if you’re able to become
creative in your approach to finding properties. So pick up the phone. What do I mean? Go to Craigslist and look in
the For Sale By Owner section of Craigslist. And see if any of those sellers
are willing to negotiate. Sit down. Find out. Maybe they are motivated and
you can get a better deal on that property. And, in fact, you may even
find that they will seller finance the property. So maybe they have
10 rental properties and they know that if they
sell the property right now, they’re going to pay
enormous capital gains taxes on the sale of that property. Well, maybe they’ll give
you seller financing. What does that mean? That means they might construct
a note, a mortgage, where you then– they are the
mortgage holder on the property. And they are basically
selling it to you for terms. It’s a fantastic way to acquire
your first rental property, using seller financing. That way you might not
even have to come out of your own pocket
for any cash up front. And you’re able
to get a property on the backs of the seller. Now it’s a win-win, because
you get the property. You get to now experience
the cash flow in taking care of this property. You own the property. And the seller doesn’t have to
pay huge capital gains taxes. That’s a win for him. Absolutely a home run
if you can find them. Now you just have
to do some digging. Get out there. Go on Craigslist. Or you could even consider doing
some direct mail in a zip code that you would like to target. So all of these things,
we’re going to dive in deeper to all of those
subjects on future videos. But just for now know that
there are multiple ways to find that rental property. And number three is ROI,
return on investment. Now I have a whole video–
which the little thing up here, the little card, you can
click on and we deep dive how to figure out ROI. But for now, just
know that we need to make sure that we’re
focused on our numbers, return on investment. That’s why we’re in this
game in the first place. I don’t care about the cute,
adorable, little bungalow that we’re going to buy. All that matters is that
we’re getting a high return on investment. And really make sure
you know what numbers you’re looking for. You can sit down with
the real estate agent and say I will not consider
a property unless I can make 10% to 12% ROI,
whatever it happens to be. We recently went through
this with a realtor we were working with
in one of our markets. They kept sending us
properties to consider. And I said, look, I have
to be honest with you. I am not going to touch
the property unless I hit these certain numbers. And they stopped sending me
all these fluffy properties, and they started sending
me specific properties that I could consider. And I ended up
buying two of them. So you need to be very
specific about your ROI, but really make sure
you understand that. And again, the little video
up here, you can click on it. It will take you
into some deeper diving on how to figure out your
return on investment number. Number four, take action. You’ve got to take action. I like to say that if you
are 80% sure of something, then take action. You’re never going to be
100% sure of anything. As long as your numbers are
in sync and certain factors are in line and you are
sticking with your goal that you set out in step
one, then just do it. Just take action. Again, you’re never going
to be 100% sure of anything in your life, so just do it. And you’ll reap the rewards. Trust me. Number five, get an inspection. Once you take action and you
make an offer on the property and it’s accepted, get an
inspection on the property. This is a great way
for you to find out what rehab and
renovations you are going to need to do on the property. So you may need to
hire a contractor to come in and spend
$10,000, $15,000, $20,000 on your renovation. Make sure that you
get an inspection so you know what to expect. But, again, I have another
great video on inspections. Don’t go crazy and think that
you have to do everything in that inspection report. OK? Inspectors are paid to nit pick. And you need to know
how much money you’re willing to spend to get that
property in great living condition for a tenant, but
not overdoing it and spending way too much money on
little nit picky things that inspectors
are paid to find. So get an inspection. It gets it down on paper. You know what to expect. And then you can take action. Number six on my list of
how to buy a rental property is find a great property
management team. OK. This is very important. I’ve worked with some
stinkers in the past. And now I work with great
property management teams who will do full background
checks on our tenants, criminal background checks. They look for evictions
in their history, late payments in their history. They’ll check with
previous landlords to make sure they pay on time. Most importantly, they will
collect the rent checks. And they will also take
care of the property. If you are living out of
state, this is very important because you’re not going
to be there to see it. So they’re going to have to
have a great property management team that’s going to
drive by the property. It’s going to make
sure that it’s rented. And that they are collecting
rent checks on a regular basis. So find a great
property management team, one that you can stand
by and work with long term. Also, make sure that they
don’t nickel and dime you. The property managers we work
with don’t nickel and dime you. So if there’s a big
thunderstorm and they need to drive out
to the property to see if there’s branches
laying on the roofs or whatever, that–
some property management teams will charge you like
$70 just do a site visit. Not the property
management teams that we partner with and work with. Absolutely not. They do a great
job, and that’s why we continue to work with them. And number seven, and finally,
just rinse and repeat. So go through those
first six steps again. And do it all over again. You’ve got that first property. You’ve got it out of the way. Great. Don’t sit and rest
on your laurels. Now rinse and repeat. Start the process over again. Pick up the phone or work
with a turnkey property provider who’s going to
get you a great property. Get that second,
third, fourth property. Call that realtor. Get your rehab and
contractors out there and start renovating
your next property. There are so many great
ways to make money with rental investing. It is an absolute game changer. And I hope that you will
take action and get out there and buy your
first rental property. I’m Clayton Morris. I’m so excited that you
subscribe to the channel. If you haven’t already, please
click the Subscribe button. You can drop us a little Like,
hit the little Like button, too, if you like this video. And we publish videos
multiple times a week. I’m so excited to have you here. We’ll see you on the
next video, everyone.

Leave a Reply