How to Buy Your First (or Next) Rental Property in 2026 (Step by Step)

0:00If you've been learning about real estate, but still haven't done your first deal. this episode is for you. Yeah, because a lot of rookies aren't stuck because they don't know enough. They're stuck because they don't know what to do next. So today we're breaking down a simple 90-day roadmap to get your first investment property under contract week by week. And this is based on the framework from Real Estate Rookie 90 Days to Your First Investment, which is the lovely book written by my co-host Ashley Kerr, and we're turning it into a practical checklist you can actually follow.

0:33This is The Real Estate Rookie Podcast, and I'm Ashley Kerr. And I'm Tony J. Robinson. And with that, let's get into the very first step, which is laying your foundation. So, Ash, what does it mean to, quote unquote, lay your foundation as a rookie real estate investor? Yeah, before you even think about analyzing a deal or finding a deal, you need to set your foundation. And you need to understand why you're investing in real estate. What is your goal? What do you want out of it? and you also need to build a personal finance foundation. So when I say that, you need to be able to know where your capital is coming from.

1:10You need to understand finances because a lot of investing is finance, whether it's stocks, whether it's a real estate investment. So there's all these things that you need to do ahead of time before you actually continue on your real estate journey. So let's start with first, why do you want to get into real estate? Because that can really shape and tailor what strategy you're going to do, how much time you're going to put into it, what deal you're going to find. Then what are your goals? Do you want to acquire one property in the next year? Do you want to retire within five years from real estate?

1:48Then your personal finance foundation. You want to be able to manage your own money before you're going to go and take on this business, this investment, and have to manage the money that this property is bringing in and the money that is going to go out from this property with the expenses. So I think those are really three things that you need to lock down and set a foundation for before we even continue on your journey to get a deal in 90 days. Yeah. And I think a big piece of laying that foundation too is just understanding what your motivations are because you can't optimize for all things equally.

2:22And like the biggest things that we have to look at when we talk about investing in real estate are like the biggest motivations are typically tax benefits, cash flow, and appreciation. And it's not common that you can find a deal that equally satisfies all three of those. So it's important as you're getting started to understand what is it that I'm trying to optimize for? And what is it that I'm willing to maybe take a little bit of a less, you know, quote unquote return on because I'm optimizing for this other thing. So if you really want cash flow, then maybe those markets that are great for cash flow aren't as great for appreciation.

2:56But if you're in a situation where you love your day job and you're fine with what you do day to day and you're really investing for retirement, well, then that strategy looks a little bit different. So I think just having a really clear picture on not only what are your motivations, but how would you rank them from most important to least important. And we're going to give you a couple action items as we go week by week. And the first thing I want you guys to do is block time on your calendar right now, you know, maybe two to three hours. And this is where you're going to sit down and you're going to answer all of these questions.

3:26You're going to define your why. You're going to understand your goals. You're going to set, you know, you know, the foundation. A really great dashboard that I use for my finances is Monarch Money. And so like I can get a picture of my own finances and know where my money is coming in and out. But I think sitting down and actually thinking about this and putting it in writing, whether that's typing it up on your computer, whether that's writing it down in a notepad, a journal, but actually taking time to really put that vision together of what real estate is going to do for you and where you want it to take your finances in general.

4:06And I think the last piece that I would say is that you've got to identify what your strategy and your niche is. When I say niche, I mean like what asset class or what type of real estate do you want to buy? Do you want to buy single family homes? Do you want to buy small multifamily? Do you want large multifamily? Do you want mobile homes? Do you want, man, we've had people flip and sell and buy all kinds of things. Manufactured homes, we interviewed a guest who all she did was buy manufactured homes. So identifying what type of property you want to buy? And then what's your strategy that you're going to layer on top of that specific niche?

4:41So I can go out and I can flip single family homes. I think that's what most people associate flipping with. But we've also met people who go out and they flip nothing but condos, right? Like that's a different process in flipping a single family home. Or at a larger scale, people who flip apartment complexes, they buy them, they renovate them, then they sell them, you know, 12 to 24 months later. So understanding not only what your niche is, but what strategy makes the most sense for you on top of that niche. And after you decide what investing strategy you're going to do in that niche, we actually have a buy box resource for you guys to help you build out even more detail as to what strategy, what type of property you actually want to purchase.

5:18And this, when you get further down the road into deal analysis, will really help narrow down the type of properties that you analyze to really cut out the fluff, the properties that you know you don't want or don't make sense anyways. So you can go to biggerpockets.com slash resource and you can check out the resource hub there. We have beginner resources, tons of things, but you'll find the buy box there among other things. So once we knock that out, Ash, we've got the foundation laid. The next piece or the next big step is choosing the market to invest into. And I think I'll open this point by saying that the biggest mistake that rookies make when it comes to choosing a market is they fall victim to the Goldilocks syndrome, where they're looking for the city where everything is just right, everything's perfect.

6:03But in reality, guys, there are 20 ,000 plus different cities across the United States. So chances are there's not just one city that's the best city for you to invest into. There were hundreds, if not 1000s of cities that would make sense for you to invest into. So the goal isn't to necessarily identify the one city that is the absolute best for you. The goal is to identify multiple cities that align with your goals and support what you're trying to do as an investor. So I think just switching that mindset from the beginning is a big change that most rookies need to make. So as we're identifying a market, we have a ton of resources also for that.

6:38You can, once again, go to the resource hub. But also on BiggerPockets, we have a find a market section. So you go to the top of the page. You can click on find a market and this will actually walk you through finding a market that works for what you want and what you're looking for and will give you the data and the statistics on that market. Another great resource is Neighborhood Watch, Bright Investor, and even ChatGPT just putting in a prompt as to I'm looking to invest in this market. Can you please tell me this specific data about the market? So you're going to be looking at job growth, average home prices, average rents.

7:19How do the property taxes compare to other states? How do the landlord-tenant laws compare? So you're going to gather all of this information. The really hard part is if you have no idea where you're going to invest, what market you're going to invest in is just picking out of the millions of markets that are available out there. So I think a really great resource is to find top 10 lists, to go into the BiggerPockets forums, look where are other investors getting deals, where are they making it work on social media. But I say this with caution. Just because it works for somebody else in a market doesn't mean that it's going to work for you.

8:02These are just starting points somewhere for you to start, to start looking at these markets. And then you're going to go and you're going to verify and you're going to do your own due diligence to make sure that market works for what you want to do. Tony invests in Joshua Tree. I have long-term rentals. If I see Tony's successful there, I'm going to go and look for a long-term rental. Tony, I'm probably not going to be successful buying a property there and listing it as a long-term rental, correct? And same for me. Like if I tried to go into your neck of the woods and put a, you know, a really crazy short-term rental, you know, next to the cow farm, actually maybe that would do well.

8:44That actually might do well. So that actually might be a really good idea. So ignore that point. But you guys get where I was trying to go with that. You can open the windows in the morning, get a beautiful draft of manure. Actually, that's an add-on.

9:01and do you want fresh manure or liquid manure there's two different I didn't even know that liquid manure was a thing so I just learned something new about it's the worst I can handle like fresh manure but liquid manure when they spray them oh my goodness so okay now we need somebody to tell us in the comments if they are you know making it work with a high-end luxury short-term rental next to a farm. Okay. So now that you've analyzed and looked at markets, once you've actually selected a market, or maybe you've selected two or three, you're going to start looking at the listings. You want to look at at least five to 10 active listings for this week.

9:43So we're into week four at this point. Okay. And you want to, even more than that will be better. And even though you could look at the listing and say, I already know this isn't going to make sense, practice analyzing them. Look up what the rent would be for each property. Estimate the expenses. What would the insurance cost be? This right here, another great plug of why I love BiggerPockets because they actually have an insurance estimator on the website. So I think it's under analyze deals section and you can go and you can just put in the property information and it will give you an estimate of what the insurance would be.

10:19Also too, now that you can use the deal calculators from BiggerPockets. And if you don't have a, I think you get like five free Tony, the calculators to use to analyze. If you need to use more than that, which I highly suggest, you can use Ashley or Tony. I think either one of our names will give you 20 % off a pro membership, but you're going to pull these listings and you're going to practice analyzing these deals. And after looking at the deals, you're going to get a really good kind of foundation as to what works in this market, what doesn't work. Maybe a duplex is actually better than getting in a single family or you know what, all of these don't work at all or not even close.

11:04So being able to compare these properties, you could even go as far as like every deal you analyze, take the calculator reports, start a spreadsheet, writing down what you notice, what worked, what didn't work, and start writing down those patterns that you notice. And that can actually help you really tighten up your buy box too. We've covered the first few steps you need to take to get your first deal in the next 90 days. We're going to take a quick break. And when we get back, we're going to talk about the numbers associated with buying that first deal. So we'll be right back after we're from today's show sponsors.

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14:40That's packed with advanced automations and features to save you even more time. All right, guys, we're back. We talked about laying your foundation. We talked about finding the right market. But now, once you know where to go, you've got to find the deals within that market to actually buy. And that's where we get to our next step. And this will take you about two weeks, which is the actual analysis of deals in that market. Now, my strong recommendation to everyone is to challenge yourself to analyze a lot of deals in a very short period of time. You could do seven deals in seven days. I like the idea of 30 deals in 30 days.

15:14But the goal is that most people do not find deals simply because they're not analyzing or underwriting enough. And if you can compress a lot of activity into a very short period of time, you increase the likelihood of you actually finding a deal. So that's my challenge to you. 30 deals in 30 days. Now, how do you actually build that skill set of analyzing deals? Well, we've got the calculators in the BiggerPockets website, which are great tools to show you what data needs to be. to go into it. But in terms of finding the data, and it'll vary from strategy to strategy. So I'll hit on short-term rentals, right?

15:48I like to look at things like average daily rate, occupancy, and overall revenue, and expenses, and cleaning fees. And we put all those together to try and understand what the revenue and the expenses and profitability might be. Ash, what about for you on the long-term rental side? Yeah. Well, the first thing I wanted to bring up, Tony, is with the real estate Robinsons, you did a 30 day deal analysis challenge before, didn't you? And what was the result of that? Like how beneficial was that? Every time we do that, we find that someone is under contract on something, right? Like without fail, when you can compress that much activity into a very short period of time, you're almost guaranteeing that you'll find something.

16:25So on the long-term rental side, one thing that I've always struggled with when I first started out was like missing expenses and not having them. So I think like following the deal calculator is really beneficial because it literally tells you all of the expenses that are in there. But then also looking at, you know, like it's not going to say snow plowing specifically because that's very market dependent. So that's where it pays to go into the BiggerPockets forums, to go into Facebook groups, to ask in the market that you're investing in, what are some other expenses that I'm not aware of? Another thing is to look at the property and understand where any other expenses could come up.

17:04So like if you have a pool, okay, so you may need to have pay for somebody to maintain the pool. Your insurance may be more because you have a pool. Looking at the, you know, if there is some kind of water system in the property that needs to be upcapped in or the furnace filters need to be changed, Are you going to be paying for that or the tenant's going to be paying them for that? So there's a lot of additional items that you may not think of for a long-term rental just because it's, oh, I got my mortgage payment. The tenant is taking care of everything else. But make sure that is written into your lease agreement then.

17:41Or if you're inheriting tenants, make sure you understand from their lease agreement what they are and aren't responsible for. Because if you find out they're actually not replacing the furnace filters and you have to replace those every six months. If you find out they're not buying salt for the sidewalk, all these other little things that need to be done to upkeep your property. We do have a recurring property maintenance guide in the resource hub also. And this guide goes through things like cleaning out gutters. When should you do it? The maintenance on your furnace, your hot water tank, all these little things that you probably do as a homeowner, but you may not think of as your rental property because somebody else is living there and it's like out of sight, out of mind.

18:28Not that you mean to ignore the property, but you're not living in it day to day to look and say like, oh man, that furnace filter is getting filled. I need to, you know, replace that. So those are some of the challenges that I have experienced when analyzing deals for long-term rentals is not thinking of all those little nuances that come along. So practice, practice, practice your market, and then going to your meetups, connecting with other investors and, you know, find somebody that will look over your deal analysis that's in your market. Tony and I could sit here all day long and you could give us your calculator reports, your deal analysis, and we could look and point out at things, but there are going to be things that we don't know about your market that somebody who is investing in that market will know way better and know more about and say these little nuances and things like that and be able to point them out to you.

19:20I think the last thing I'd add to the underwriting is that you have to understand that the first several deals that you analyze, it's going to take you a painstakingly large amount of time to actually get through those deals. But as you do more, the time it takes you to do one is going to be this much. if you're listening to this, my hands are very far apart right now. And by the time you get to deal number five, it gets a little bit smaller. By the time you get to deal number 10, it gets even smaller. By the time you get to deal number 20, you're now flying through this because you've already analyzed 19 other three bedroom, two bath properties in your specific zip codes.

19:54You have a sense of what the revenue is, what the expenses look like. So now you're kind of flying through it. So you've got to build that momentum, build that flywheel, really trudge through those first five or 10. By the time you get to, again, 15, 20 deals, analyze any specific market with a specific buy box, you'll be flying through it. So then after that, we're going to head on to building your team. So some of the important team members that you'll need is if you're going to do financing, you're going to need a lender or a private money lender, wherever you're getting money from to actually purchase the property, you need that person on your team.

20:27You could need a wholesaler or a real estate agent, depending on how you are purchasing properties. Even if you're doing it off market, like if you're in New York, like me, you need to use an attorney to close. So you'll need an attorney on your team. You could need a title company. So building your team, you can go to biggerpockets.com slash team. And we have connections with these team members, accountants, bookkeepers, lenders, anything you can think of for real estate property managers that we can connect you with in your market. you basically like a matchmaking service. So you can go and check that out.

21:06If that's something you are missing, then another thing is asking for referrals, connecting with other investors in that market, in that area, putting it on your Facebook. You never know who you're friends with on Facebook. That is also an investor. So then you start making those connections, reach out to a real estate agent, reach out to an insurance agent, reach out to a contractor and handyman. And I know this may be awkward as to you don't even have a deal yet, but like starting that process with a contractor or insurance agent, but still an insurance agent could be the person that you have for your home and auto insurance.

21:43And you already have an established relationship with them, a contractor handyman, just for getting an idea, just call them, let them know what you're trying to do. And that you're looking for a handyman to take care of a property once you get in on a contract and see if that's even something they'd be interested in. What are the rates? Things like that. Ask for start building a list. So like Daryl's super good at this. Whenever we see like a truck or something that has, you know, like Tony's painting company, he'll take a picture of it. And, you know, it usually has the website or the phone number.

22:18And then he has a little spreadsheet that he updates. And then eventually I put it in monday.com because he likes his spreadsheet better. But we just have this whole list of contractors and like a huge majority of them we've never even used, but we have them there. And we just keep this database of contractors if we ever need them. Great minds think alike. I have an iPhone album where like as I'm driving, I just snap photos and I save it to that specific album. And that's how I add folks to my Rolodex. But also on the BiggerPockets website, you guys, we have the agent finder, the lender finder.

22:55There's a place where you can find tax professionals, property managers, people to do 1031 exchanges. So as you're starting to look for these folks to build out your team, going to bigger pockets first is probably a good first step. Okay. So once you've got your team built, you've analyzing deals, now it's time to actually take action and make the offers. Okay. Now there's a couple of things you need to get comfortable with to make your offers. You need to have some kind of trust with your agent if you're doing on-market deals, or you need to have somebody that actually understands a real estate contract, like an attorney, that can help you if you are doing off-market because you'll still need to have a formal contract together.

23:35And I do not suggest just finding one online or having chat GPT, create a contract for you to put together. So once you have that, you can start making offers on properties and negotiating deals. One thing that I had struggled with for a while was I would be embarrassed to do lowball offers. I would feel like I was offending the person. And now I have no problem at all. The worst thing that has happened with making a lowball offer is that. They just say no. And that's it. And maybe something like, no, that's too low. That's an insult to us. OK, no big deal. And then I usually follow up. Well, let us know if you change your mind.

24:21Sometimes I get, you know, they'll negotiate back with me. I get a counter offer. Sometimes it's accepted. So if you're analyzing deals and it looks like no deals are are working for you, try lowering the purchase price. That's the easiest thing to manipulate, the easiest number to change. If you change any other numbers, you might make your deal not accurate because you're manipulating the numbers. So decrease your purchase price until the deal works for you and start throwing out those offers. Yeah, Ash, I could not agree more. I think the biggest mistake that rookie investors make is that they take whatever the listing price is as the lowest acceptable price that a seller is willing to entertain when in reality, they might be overpricing just knowing that they're going to get a lot of lower priced offers.