Know Your Limits

• Like any financial plan, an investor in a rental home must consider several factors. One factor is how much money the investor wants to put into the home. This is not just how much money you want to pay for the home, but how much money you have to renovate and fix the infrastructural problems. Another factor is the lending rates. If you receive a bank loan, consider the most sustainable lending rate and loan amount for your finances. If the lending amount is too low, you need to pay more for the house upfront. However, if the lending is high, you need to pay more back to the bank.
  
  

Finding the Right Home

• Like finding a home to live in, you need to find a rental home with all the right attributes to make you a profit. The home needs to be in your price range, of course, but it should be in a relatively healthy housing market. Investing in a home where there is little chance the housing prices are forecasted to rise can lose you money if you ever sell the property. The home should also have attractable qualities, especially qualities that will spark potential renter attention. Location near municipal offices, a downtown, en route for public transportation, or near cultural centers are all attractable qualities that a renter may find interesting.
  
  

Go to your Bank

• Once you find the right home to invest in, you need to purchase the home from its original owner. This requires knowing your financial limits and deal-making. For example; if you know you have to fix the heating system in the short term, tell the landowner you will buy the house below what the landowner is asking because of the repairs. If the landowner accepts a deal, you must go to a bank for a housing loan. This step requires you to shop around for the bank with the best rate and one that accepts your financial plan.
  
  

Closing

• Once a bank officially gives you the loan to purchase the rental property, you can confirm you have this money to the original landowner. The original landowner signs over the deed to you and you sign the new deed in your name. You then pay the landowner the amount of money determined under the deal, usually in a bank check format. This process is known as the closing. Once everything is processed, the home is officially yours. At that moment, you can begin on renovations, finding tenants (unless tenants already live on the property), and altering the property to your liking.