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Purchasing your first investment property can be a daunting task. If done right, however, investing in real estate can set you on a path to success and financial freedom. Here are some tips to use when purchasing your first investment property.

Purchase a “Turnkey” Property

The easiest way to invest in real estate and start making money immediately is to purchase turnkey properties. These properties already have tenants, so you will not have to fork out thousands of dollars in payments while you search for renters. You can also find real estate that has a property manager in place, which will make your job less difficult.  

Invest in a Good Area

We all know that location is crucial in real estate, so be sure to research the area where you are considering investing. If an area is growing quickly, property soon becomes expensive— especially for first-time investors. But if an area isn’t growing, it may be unwise to invest there. Often, some of the best deals can be found in areas that are undergoing changes. Aim to find a cap rate of at least seven percent.

Talk to Nearby Residents

Once you find a property that you are considering purchasing, talk to nearby residents. Ask the neighbors what they think about this area and about the property you are looking at. Ask them if they’ve experienced any problems with the current tenants or even the current owner. It’s also a good idea to explore the area during different times of the day and week. 

Invest Enough to Have Cash Flow

It’s also critical that you are investing enough in your property that you will be cash flow positive right away. If you aren’t cash flow positive at the beginning, there’s a high chance that you’ll sink after a few problems occur. If you have cash flow immediately, however, you’ll be able to deal with unexpected expenses and are more likely to keep your property long-term. 

Develop a Marketing Strategy

If you purchase a property that doesn’t already have tenants, you need to quickly develop a marketing strategy. The quicker you can attract new renters, the better. If you get lots of applications, you can be pickier about the tenants you select. Consider marketing online, especially on real estate sites. 

Consider Purchasing a Single-Family Home First

You may want to consider purchasing a single-family home as your first investment property. Single-family homes are a great way to learn the ropes of real estate investing. You will only have one set of renters and a small amount of upkeep in a single-family home. After you’ve experienced life as a landlord, you can then consider investing in a multi-family unit.

Use these tips to help you select a property and invest wisely. If you do, you’ll soon be on your way to success as a real estate investor.