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3-Step Rental Property Investing Strategy

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When you first try and formulate your rental property investing strategy, there are 3 main considerations:

• Determine your objective and time horizon
• Determine your targeted property type
• Determine your target area

The first consideration is your objective and time horizon, both of which go hand-in-hand. Are you looking to turn a quick profit by holding the property for 1 year and then flipping it? Or is your objective to build long-term equity by holding and renting out the property?

Next, you must choose your preferred property type. For “small time” investors, 2-4 unit multi-family properties usually make the best choice because rental income tends to be substantially higher yet overall expenses are only slightly higher than, for example, a single-family home. Usually, old properties (50 or more years old) in older neighborhoods offer the most value. Additionally, you’ll want to focus on properties with multi-bedroom units.

The third key factor to determine is where to start buying rental property, and the best way to do this is to grab a map and drive through all the towns within a 30 minute drive from your house (anything farther than that is too difficult logistically and will consume too much of your time). This driving expedition should allow you to narrow down your choices to just a couple of towns. You can then look at multi-family listings within each area (use a site like and compare the list prices with those in other, nearby towns to get a sense of the affordability of investing in that specific target area.

That’s all there is to it. To sum up, the overall strategic framework is as follows:

  • Determine your goal (monthly income, retirement, etc.), and how many investment properties you must acquire to achieve it. Plan to hold and rent each property for at least 10 years.
  • Pick an older neighborhood no more than 30 minutes from your house.
  • Look for 2-4 unit non-owner occupied older rental properties with multi-bedroom units.

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