I know what some of you are going to say, there is no “best” first rental property. But, just hear me out on this one, and you might end up agreeing with me!
Qualifications of a Great First Property
A great first property would have the following characteristics:
- Easy to Find
- Easy to Get a Good Deal on
- Relatively Low Risk
- Long Term Tenants
- Easy to Sell
What fits these qualifications?
Single-family homes of course! You can always find a wide assortment of single family homes in any area. As most people are homeowners before becoming investors, you are typically familiar with single-family home prices in your area. You know what neighborhoods are desirable, so you will probably know a good deal when you see it. Single-family homes are lower risk than say a four-unit apartment building. Banks are more likely to lend you the money, and you are typically going to have less tenant turn over (say that 10 times fast!). The cash flow might not be as great as other investment properties, but for someone just starting out, it can be a great way to learn the ropes of dealing with tenants. You can also hold onto the property for a little while, then turn around and sell it faster than a 10-unit place because both investors and owners will be looking for single-family homes.
Our Steady Foundation
I’m sure you can tell that I am a little obsessed with single family homes as rentals. We have a family that has been in one of our rental houses for 10 years, yes, 10 YEARS! They send a check every month, and we rarely even hear from them. They keep the place spotless, and are fantastic people. That place is so little work for us; we almost forget that we have it…until the check comes in. It’s awesome. I would encourage you to strongly consider a single family home as your first rental property. Our single family homes are like our rental property foundation. Kind of boring, but they provide a steady income stream with minimal work, so we can do some of the more risky investments. If you are thinking about investing in your first property, I’d highly encourage you to make it a single-family home!