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Last updated: March 28, 2023 • Real Estate Investing

Best Starter Properties For Investment

Investing your money in an asset for the first time can be tricky and stressful. Whether you worked hard for your financial resources or inherited them doesn’t matter. If you proceed hastily, you still expose yourself to the risk of losing your investments (i.e., your hard-earned money). 

For your information, no 100 percent foolproof real estate investment exists. Still, suppose you’re fascinated with building wealth for the first time and developing your starter investment portfolio. Then, we’ll recommend you one of the safest bets, investment properties for beginners! Let’s discover the best starter properties for investment!

Table of contents:

How to approach the best investment properties 101

business woman celebrating

For starters, everything boils down to how to finance your home safely in 2023. In order to achieve this goal, you’ll need to build your creditworthiness! Then, you can think of your bright future investment-wise and start searching for investment properties for beginners! In fact, you can make money off of investment real estate properties in limited ways. 

Firstly, you can purchase a property and sell it at a higher price; essentially, you’d be into house flipping. Secondly, you can rent an apartment. Thirdly, you can buy a second home which you can use as an Airbnb, vacation rental, or log cabin. In fact, it’s a variation of the second option. 

How to find good investment properties? Locating and investing in a rental property for beginners constitutes a significant part of this article. Right off the bat, established and top-tier local real estate agents will assist you in working on your starter investment portfolio and investing in rental property for beginners.  

Investing in a rental property for beginners

investing for beginners on paper

Besides wholesaling and flipping, one of the most popular investment techniques is investing in a rental property. Don’t let money stop you from getting into the rental game! You can start by owning a house or condo as an investment which you later rent out to a long-term tenant. We recommend organizing meticulous tenant screenings to ensure you find a financially reliable individual. Why is this process crucial? 

A tenant will pay the mortgage for you; ideally, they will provide some extra profit on top of the monthly mortgage settlement. As a result, ten to thirty years from now, you can pay off the loans on your property without breaking a sweat. 

Rental properties make for the best investment properties added to your starter investment portfolio! The rent will no longer be consumed by paying your mortgage but will bring you a stable monthly rental income. In other words, you’ll become a landlord, and renting out your apartment will become a lucrative side hustle

How do interest rates for investment properties influence your budgeting?

house goind red arrow

Purchasing good investment properties for beginners may seem out of reach, but hear us out first! In the beginning, you must focus on improving your credit score first. Mortgage lenders and banks look at your credit history before determining what sort of home loan you are eligible for. The higher your credit score climbs, the lower the interest rate you’ll have to cope with. To secure the highest profit, you must strive to obtain the lowest interest rate for your loans!

You might also wonder whether you need escrows for your mortgage. This is one of the most recurrent misconceptions about mortgages you should know (and actually, you don’t need it!) In addition, you can finance a property with bad credit because you’ll make up for this “handicap” with a more substantial down payment plus higher interest rates in the long run.

Are interest rates higher on investment properties than on primary-residence loans?

stacked us coins on wooden

Is there a difference between getting a first-home mortgage and a loan on rentals or investment properties? The interest rates for investment properties are regularly higher as banks fixed a higher payment for “non-owner-occupied” deals. 

Under such circumstances, investment loan rates are from 0.50% to 0.75% pricier than primary mortgage rates. The bonus covers the financial risks lenders undertake if you default on your loan. 

The cons of interest rates for investment properties

The Mortgage Reports announced that the investment property rate was 6.75% to 7 percent instead of 6.25 percent on the primary residence rate (conventional 30-year fixed rate) as of March 6th, 2023. For a standard 15-year fixed rate, you must pay 6.25% to 6.5% if you wish to acquire an investment property. 

Remember that you’ll require more equity or personal assets to score the best interest rates for investment properties to support your claim. And lastly, you’ll likely pay more in closing costs for such loans.

How to find good investment properties?

magnifying glass

Finding the best investment properties has always been a tough nut to crack. Let’s look at some excellent solutions for how to find investment properties in your area! 

Locating the best investment properties on MLS

You should check the multiple listing service (MLS), the most well-known online platform where agents put their assets for sale. You can find many great deals on the most incredible real estate playground in the US! A little trick up-front is searching for an investor-oriented realtor. 

Then, get creative with your research and see the hidden potential in a home. For instance, suppose you want to invest in a two-bedroom house. However, you go for a one-bedroom with plenty of square footage to turn it into a two-bedroom property. There’s great competition in MLS, and only some buyers and investors see invisible but real prospects! Thus, you’ll be at an advantage.

Everybody is interested in how to find investment properties. Once you’re notified about a deal, you go all in immediately. The other solution would be looking for deals on the market that were listed a long time ago. The owner will likely be open to price negotiations.

How to find investment properties on your own?

aerial view drone suburb

Get a full tank or charge your emission-free, green car, and let’s go for a ride! Drive around the larger area you’re interested in and locate slightly run-down or vacant properties. Look for overgrown lawns, garbage in the yard, boarded-up windows, and uncollected newspapers in front of the entrance door. You might even stumble upon a legal notification about eviction or foreclosure. 

Your next step should be to look up online the property owner through your county assessors’ website or the county records, which are public. Call or email them and present your offer! 

How should you go about establishing a fair price offer? You’ll need additional information about the neighboring real estate prices or real estate comps. This will show you how much money homes were sold for in the immediate area. You can turn to local realtors about this!

Browse for good investment opportunities online!

woman connecting her phone

You can skip a fair amount of legwork, resort to the Internet, and see how to find good investment properties online. Indeed, technology amped up the real estate industry, and you can benefit from it! Be present on social media, forums, and groups related to buying-selling real estate! 

You’d be surprised by how many people put their faith in Facebook, Twitter, and TikTok to sell their properties. You can also locate owners who fell behind on their mortgage payments or can’t keep up with monthly bills. Secondly, you can also find homeowners who don’t want to do anything with their second home and might show inclination for a good deal. If you’re under tight budgetary constraints, these proprietors might go into an owner-financing scenario that will buy you some time to settle the score.

Out-of-the-box investment real estate properties

usa world cup

Suppose you can do without buying investment properties at your current location. In that case, we recommend some unique ideas on how to find good investment properties. The key is searching for a city or town with significant future potential. For instance, the 2026 FIFA World Cup in the USA has already generated a lot of buzz in terms of real estate investment. The top match organizers are Atlanta, Boston, Dallas, Kansas City, etc. 

Investment properties in Florida have always been a safe bet because people flock to the Sunshine State. However, with Miami among the host cities, Florida targets soccer fans too (besides millionaires, retirees, snowbirds, young professionals, and so on.)

On the other hand, relatively unknown charming US cities can provide more investment properties for beginners since major cities have already reached a point of saturation real estate investment-wise. 

Investment properties in Orlando are exquisite!

orlando skyline panorama

Consider looking into future retail developments as they influence real estate prices. For this reason, investment properties in Orlando, for instance, are in high demand. If you manage to get your hands on any property in the city of Disney World, that will make you a lot of money in the long run. 

Still, you must know that the rental market in Orlando, Florida, though profitable, is quite competitive. Reaching out to the large landlord community would be a great idea. Besides, vacation homes, rentals, and Airbnb are the best investment properties in Orlando, so entertain the idea seriously!

Renting out investment properties in Florida as a rental cabin near the Sunshine State’s hidden gems is lucrative! 

Conclusion

Why is investing in rental property for beginners such a good idea? Based on 2023 real estate market predictions, rental prices will increase by about 8.4 percent in May 2023. We still suffer from the cost-effective housing shortage. In short, renting out your investment property will bring you a big buck.

This article aimed at providing financial tips and tricks and location scouting on investing in rental property for beginners. You wouldn’t believe how many profit-making yet hidden investment real estate properties the United States can offer you. 

In the first round, we advise you to get your credit score in great shape to get the best loans with the lowest interest rates. Remember, though, interest rates for investment properties are significantly higher than interest on loans given for first-time residences. Secondly, you must seek an answer on how to find good investment properties! For this purpose, keep an open eye on investment properties for beginners to boost your starter investment portfolio. 

You can achieve that by contacting experienced local realtors and constantly monitoring the MLS. Then, you can track down an uninhabited, empty, or neglected house or any construction on-site or online because you can buy them cheaper. We also suggest looking into unchartered but profitable rental markets in the US that aren’t oversaturated but showing great promise in the future. Don’t be upset if you can’t purchase the most sought-after investment properties in Florida at first! Once you’re no longer a beginner, you can add that to your list.

How would you go about expanding your starter investment portfolio? Did you come up with alternatives on how to find investment properties in your area? We would like to hear your creative input in the comment section below! Give this article a big thumbs up on social and share it with your friends!

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2 Responses to " Best Starter Properties For Investment "

  1. Alvino Mcgee says:

    Great article. I have a company but I’ve been looking more into real estate articles like this really help me on the right track. Thanks Attila you’re appreciated.

    • Attila Szabo says:

      Hello Alvino! Thank you for your feedback. We’re happy we can deliver valuable information. We strive to bring the most up-to-date stats and news in the future as well.

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