Real Estate Investing 101: How to Get Started and Buy Your First Rental Property

If you’ve been thinking about investing in real estate but feel overwhelmed by high interest rates, rising prices, and confusing strategies, you’re not alone. Many people hesitate because they’re unsure when or how to start.

I get it. Back in 2020, I thought real estate prices were sky-high. Everyone around me was saying, “It’s too expensive! There’s no way prices can go any higher!” But now, looking back five years later, those same deals seem like absolute steals.

Now, imagine it’s 2030. How do you think we’ll feel about today’s prices?

I’m not saying to overpay, but real estate rewards those who take action with a long-term mindset. The best time to invest was yesterday. The second-best time is today.

So in this post, I’ll break down step by step how to buy your first rental property—even in today’s high-rate, high-price market.

Step 1: Understand How Much Money You Need

How Much Do You Need for a Down Payment?

The first step to buying your first rental property is understanding how much cash you actually need to get started. Contrary to popular belief, you don’t need 20% down to buy a rental property. Here are some options:

• House Hacking (3.5% Down FHA Loan) – If you’re open to living in the property, you can buy a duplex, triplex, or fourplex with an FHA loan for as little as 3.5% down. The rent from the other units can cover your mortgage!
• Conventional Investment Loan (15-25% Down) – If you want to buy a rental property outright, most lenders require 15-25% down for an investment loan.
• Seller Financing & Partnerships – If you don’t have a lot of cash, you can find creative ways to invest by negotiating seller financing or partnering with an investor who provides the down payment while you manage the property.

If you’re serious about investing, start saving aggressively and consider alternative financing options to get started sooner rather than later.

Step 2: Get Pre-Approved for Financing

Before you start shopping for properties, you need to know how much you can actually afford. In today’s high-interest-rate environment, shopping around for a mortgage is more important than ever.

How to Get the Best Loan in Today’s Market:

• Talk to at least 3 lenders to compare rates, fees, and loan programs.
• Ask about rate buy-downs—paying a small upfront fee could reduce your interest rate significantly.
• Consider adjustable-rate mortgages (ARMs) if you plan to refinance later when rates drop.
• Explore local grants & first-time homebuyer programs—many cities offer incentives to help with down payments.

Remember, interest rates fluctuate. You can always refinance later, but a good deal on a property is forever.

Step 3: Find the Right Location

The success of your rental property depends on location. A great deal in a bad area can turn into a nightmare, while an average deal in a thriving area can be a long-term wealth builder.

What to Look for in a Rental Market:

✅ Population Growth – More people moving in = more demand for housing.
✅ Job Growth – A strong local economy means more tenants who can afford rent.
✅ Rent-to-Price Ratio – Aim for properties where monthly rent is at least 1% of the purchase price (e.g., a $200K property should rent for $2,000/month).
✅ Landlord-Friendly Laws – Avoid markets with strict eviction laws and rent control policies.

If you live in an expensive city, consider investing in a more affordable market just outside of major metro areas. Some of the best cash-flowing rental markets right now include [insert top markets for 2025].

Step 4: Analyze the Deal Like a Pro

Before you make an offer, you need to run the numbers. Never buy based on emotions—always use math.

How to Calculate Cash Flow:

Let’s say you find a rental property priced at $250,000 with expected monthly rent of $2,000.

Estimated Monthly Expenses:

• Mortgage (with 7% interest): $1,500
• Property Taxes: $250
• Insurance: $100
• Maintenance & Repairs: $100
• Property Management (if hiring one): $200

💰 Total Expenses: $2,150
💵 Monthly Rent: $2,000
🔴 Negative Cash Flow (-$150/month)

This is NOT a great deal!

Instead, you should look for properties where rent covers all expenses and leaves you with at least $200-$300/month in positive cash flow.

💰 Golden Rule: If it cash flows from Day 1, it’s a good deal.

Step 5: Make an Offer & Close the Deal

Once you’ve found a profitable property, it’s time to make an offer. Here’s how to negotiate like an investor:

Negotiation Tips for Today’s Market:

• Make an offer BELOW asking price (but still competitive).
• Ask for seller concessions—get them to cover closing costs or offer a rate buy-down.
• Get an inspection—always check for major repairs before committing.

If everything looks good, close the deal, get your keys, and celebrate! 🎉

Final Thoughts: The Best Time to Invest is NOW

It’s easy to get caught up in market fears and high interest rates, but real estate investing is about the long game.

Just like I thought 2020 prices were too high, we’ll likely look back at today’s prices in 2030 and think, “Wow, I wish I had bought more!”

The key is to invest smart, run the numbers, and take action.