Shannon Pineau - How to Buy and Manage Your First Rental Property

TO YOUR SUCCESS!

My name is Shannon Pineau and I want to start by saying THANK YOU for buying my eBook!

Ive been a landlord for many years now but when I was getting started and thinking about buying my first property I had many doubts and fears. Some of the questions going through my mind were, Can I afford this? How will I know how to find good tenants and what to charge for rent? What do I need to know to manage a property and be a good landlord?

I knew that I wanted to buy a property so that I could get ahead financially but it was a huge goal and seemed very overwhelming. I remember wishing at the time that I had a good step-by-step guide that was easy to understand to walk me through the process or even an experienced landlord to advise me and show me the ropes.

It took a lot of work to find all of the information that I needed because there were so many sources available. I did a lot of research, read a lot of books, took some classes, joined a real estate investor network and then eventually took the plunge and started with my first property.

Fast forward several years and now Ive had multiple rental properties and all kinds of different tenants and experiences along the way. Ive also never forgotten that wish to have a coach and a step-by-step guide to follow when I was just getting started.

So here it iswith this eBook, I will guide you through this process from start to finish and help turn this into an easy, organized, profitable business for you. My ultimate goal is to help you achieve financial success through owning rental properties so read on and lets get started on that journey. I am YOUR RENTAL PROPERTY COACH and I will show you how to do it all.

THE ADVANTAGES OF OWNING A RENTAL PROPERTY

Buying rental properties is an amazing way to increase your wealth exponentially over time. Heres why:

You own an appreciating asset. All markets have their ups and downs, including the real estate market, but historically they rise over the long term. The property will appreciate on its own with regular maintenance or you can improve the property to increase the value more quickly.

Its a tangible asset, meaning that you can go look at it and touch it any time you want. Unlike the stock market, you know exactly what you have purchased and you can see your investment right in front of you.

Someone else is paying it off for you. Once you have tenants in place, they are paying the mortgage on the rental property for you and eventually you will own the asset free and clear using someone elses money. Of course there can be shortfalls along the way and you might end up covering these with your own money but overall, the bulk of the mortgage will be paid by your tenants.

You can use the property as a source of income for yourself. Once the property is paid off you can hang on to it for the income it produces. You could use the income to finance more rental properties, use it to finance other investments, use it to supplement your income so you can work less, or use it to contribute to your retirement.

You learn valuable new skills. You learn the best way to find and buy new rental properties, how to manage your properties, how to do minor repairs, and so many more things that are too numerous to mention. This experience will teach you so much and the more you learn about investments, finances, and dealing with people, the better off you will be in almost every aspect of your life.

BUYING RENTAL PROPERTIES

The Easiest Way to Buy a Rental Property

When I first started to consider buying a rental property, I did all my homework. I started taking community college courses on the subject, I joined real estate clubs, and I started to actively look for properties in my city. At the time, it was a very heated and competitive market. With prices sky high (and often competing buyers showing up to purchase properties), it was almost impossible to find a place whose rent could cover all the expenses.

When youre getting started, banks generally want a 20% - 25% down payment for a rental property, which can be pretty hard to come up with. If you borrow this money, your rent should ideally cover this monthly payment but even at the very least, your rent needs to cover:

Your monthly mortgage payment(s)

Property taxes

Property insurance

With the properties that I was looking at (even the fixer-uppers), I could never charge high enough rent to cover all of these expenses. It was from this frustration that I had my first brain wave.

WHY NOT MOVE? Rent out the house we were living in and buy another one. Once I had this epiphany, the advantages were obvious:

We could do a 5% down payment on our next house because it would be our principal residence. This is generally a lot less than the 20-25% down payment needed to purchase a rental property.

We had already been in the house a few years so our mortgage was manageable and we knew exactly what the mortgage payments were every month. It was very easy to see where we would need to set the rent to cover our expenses.

We knew everything about the place so there was no need to do any inspections and we werent going to find any surprises. We only needed to do a thorough cleaning to make it ready for tenants.

We could take out a secured line of credit on the house to cover our down payment for our new place. In our case, the rent also covered this new monthly payment as we had lived in the house for several years and had the mortgage paid down. This might be the case for you as well.

We had a nice house so we could attract better tenants and charge higher rent.

There were still a few disadvantages that we needed to overcome:

We had to move. This seemed very big at the time, especially because we loved the house, but I overcame it easily because I knew what I wanted. I wanted to get ahead in life and this was going to give me a huge head start.

There would still be moving expenses and closing costs on our new house. Yes, true but well worth it in the end.

If you only put down 5%, you will probably have to pay for mortgage insurance, which can be a bit costly. You can add this to your mortgage so, while its not the greatest thing in the world, its still getting you going. Most people WANT to put down 5% because 25% can be a huge chunk of change but I still need to list it as a disadvantage.

I admit that this all seemed incredibly daunting at first and maybe it does to you too. Once youre set up, though, its not hard at all and you can do it again and again.

If you decide to go this route and rent out your current home, you need to get a house appraisal done. Down the road when you sell this rental property, it will trigger a capital gain, so you will need to know what it was worth the day it was turned into a rental not the day you first purchased it.