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How To Buy Your First Rental Property In Your 20s or 50s

With some adjustments when you are in the latter group, for sure

Have you ever wondered how to use rental properties to make money? Ever wondered if being a landlord is even worth it? Nowadays, you can get information just about anywhere on real estate investing for beginners.

So you thought, “Maybe I can do it too?!.
Wait, but where should I begin!?”

Before my first rental property, I had no clue about what I was doing and where even to start.

There were so many questions that I needed answers for:

  • Where do I get the money to buy a rental property?
  • Should I incorporate my rental properties or own them personally?
  • How much can I afford?
  • How do I even know which property is a good deal?
  • What if I get a bad tenant? Or worse… what if I can’t even find a tenant!?
  • What if the house burns down!!?

On many occasions, these questions would’ve stopped me from investing in rental properties before I even started.

I’m glad to say that I didn’t let the fear of failure stop me from starting my real estate investing journey. Because now, I have 6-10 cash-flowing rental units that are paying for my principal residence (11 units in total) where I live and money left over to pay for two people + a dog’s living expenses.

Not too shabby for a millennial IT yuppie. 

While there are many ways to build wealth, I chose real estate investing simply because I LOVE everything about it. Not only has it helped me create a source of passive income, but it also taught me to look at my wealth differently.

Investing your money in a rental property doesn’t have to be intimidating. This is why I’m going to be sharing with you the seven steps that I took to help me buy my first rental property while working full-time at a desk job.

Step 1: Get Your Finances Straight

Cut Those Unnecessary Expenses

Being a millennial, I had my share of buying things that I didn’t need.
Like that overpriced Chanel bag, I bought? Yeah… did not need that.
But somehow, I convinced myself that it was a good purchase.
I mean, why wouldn’t it be?!

YOLO, right?!

So if you’re like me, you must figure out how much money you’ve been wasting and start working on your spending habits. Start by making it a habit of tracking down everything that you spend.

One of the ways to start cutting your expenses is to start a budget plan and learn to follow it. Resist the urges to blow money on those “temporary high” purchases and invest in your long-term wealth instead.

Try to ask yourself before buying anything, “Do I need this, or do I want this?” This simple question is enough to eliminate most of your bad purchases so you won’t have buyer’s remorse as often as before.

Once you have established a good habit, saving for your initial capital will be easy!

Start Saving And Set Up An Automatic “Pay-Yourself-First” Plan’
For those of you who are anti-budgeting – This is for you. In fact, “pay-yourself-first” is the main reason I could save $100k by 25.

What does “Pay-Yourself-First” mean anyway?

It simply means you get your paycheck before paying for your bill(s) or credit card(s). You PAY YOURSELF FIRST! And whatever you’re left with afterward is what you’ll be living with for the rest of the month.

Start by setting up an automatic deposit on the same day you get paid and put a set amount of money away from your chequing account to a separate investment account. This is a good habit because your money is “gone” before you can even use it.

If you don’t have a savings or investment account – Seriously, go to the bank and open one! Let’s face it – The person that will care the most about your money is you.

You’ll need to save a good chunk of money before buying your first rental property. For my Canadian readers, sign up for Caddle for FREE and get cash backs when you shop so you can save more money!

I understand that there are full of resources out there about the “no money down” strategies. However, no matter how you purchase it, it’s always smart to have a reserved fund prepared and ready to be used in case anything happens. Hope for the best and prepare for the worst.

Step 2: Find Out How Much You Qualify For

Now that you’ve got your finances straight. It’s time to see how much “real estate” you can afford.
As a real estate investing beginner, you will most likely get your loan the conventional way. That is through a mortgage broker or visiting one of the big banks.

If you do this, you’ll need to make sure your credit score is looking good because banks will be looking at your credit history to determine whether or not they want to lend you the money.

You’ll need to provide banks with information about your annual income, assets, and liabilities. So if you have any unpaid consumer debts, I would suggest that you get rid of your debts to get a better chance of approving for more.

Having a trustworthy mortgage specialist is essential as a part of this process. If you don’t know one, ask for a referral or interview a few independently.

Personally, I find that getting a recommendation from your friends or family is better than you trying to find one on your own. This way, the mortgage broker is already aware that you’re a referral from their existing client or someone they know.

They’ll work harder for you because they don’t want to embarrass the person who referred them.

Step 3: Do Your Real Estate Investing Homework

So, what kind of homework should you do?

Start by learning about the different real estate strategies that are available and find the method that works best for you. If you don’t know what they are, then start your research. I like to invest using the buy-and-hold strategy. I use a variety of real estate investing apps regularly to help get my deals.

Then you can learn all the important real estate investing terms and formulas to understand how to do the math correctly. If you’re a newbie real estate investor and want something you can use to analyze properties on the go, then I highly recommend DealCheck.(Read the full review here, and get the 20% discount by using code “SIMPHOME” during checkout)

Using DealCheck will save you a lot of time because it will accurately analyze multiple properties without remembering all those terms and formulas.

Here are some real estate investing resources to start your journey:


Bigger Pockets/forums: This is an awesome site to learn from, especially starting. They have so much useful knowledge and resources there. All Free! Not even joking! Yes, I know it’s an American site. But honestly, many of the ideas/strategies work in Canada too. Also, look for their podcasts and start listening to them. Instead of doing a ‘Netflix and chill,’ why not do a ‘BiggerPockets and chill’ instead!?

Financial Post: Being a Canadian real estate investor, you always want to keep up with all the latest financial news in Canada. This site tells you exactly that! There are things about real estate investing, personal finance, stock market news and more. Most importantly, it’s really interesting to read too.


Rich Dad Poor Dad by Robert Kiyosaki
Think and Grow Rich by Napoleon Hill
Real Estate Investing in Canada by Don R. Campbell
How to Win Friends and Influence People by Dale Carnegie
On top of that, learn from other investors’ mistakes so you can start your own journey like a pro!

Learn to meet and mingle with other like-minded individuals. Yes, I know this is an introvert’s worst nightmare. Being an introvert myself, this is something that I haven’t mastered too! However, I try to be open-minded and network whenever I can; meeting the right person can do wonders for your investing career.

Lastly, if you’re wondering if you should incorporate your rental properties, make sure you read this post on rental property incorporation.

Step 4: Find A Mentor

When looking for a mentor, you want to find someone who has way more experience than you. You want to find “The Yoda” of all real estate investing.

Someone who can guide you along your journey. If you’re lucky enough to know someone like that around you, you should take this person out and pick their brain, like yesterday!

On the other hand, if you don’t know anyone that qualifies to be your mentor yet, don’t worry; me too!

A mentor can be a “virtual” mentor as well.
Someone who inspired you from a book, podcast, or blog post! Some mentors who have inspired me are Grant Cardone, Robert Kiyosaki, and Mr. Money Mustache.

They have taught me much, from real estate investing to personal finance.
Whenever I feel a slight defeat, I look to them for inspiration.
Learning from your mentors can motivate you to do great things.
So stop making excuses and find a mentor who inspires you to succeed!

Step 5: Find A Location To Invest In

In the world of real estate investing, finding a location to invest in can be an intimidating thought. If you’re just starting out, I recommend investing somewhere close to your home. Pick somewhere you’re familiar with and comfortable investing your money. Think of it as looking for a permanent home for your money. 🙂

Here are some of the main criteria that I look for when buying a rental property:

  • Location
  • Future Jobs, Opportunities, and Developments
  • Unemployment Rate
  • Population Growth
  • Vacancy Rate
  • Rent Prices
  • Crime Rate
  • Property Taxes

These are some key points to start your location hunt. Once you’ve picked the location, there are many other things to consider, such as building your own real estate investing team. When you get to that point, you want to find someone as motivated as you are, preferably a real estate investor.

Step 6: Practice Analyzing Real Estate Deals

Once you’ve found the location in which you want to invest, find a few deals and start analyzing them. When analyzing any deal, you want to consider all income and expenses.

Here are some examples of the types of incomes and expenses that you should consider when doing your analysis:

  • Income: Rent, garage rental, coin laundry, or any payment that your rental property brings in each month.
  • Expenses: Property taxes, mortgage payments, insurance, property management, maintenance/repairs, vacancy rate, utility rentals, utility costs, strata fees, or any expenses that your rental property is costing you each month.

Now that we know what type of income and expenses a rental property might have, let’s understand what cash flow means.

The cash flow is the amount of money left after you’ve deducted all monthly expenses of the rental property. This is where the monthly passive income comes from.

As you can see here, there are way more expense items listed than incomes.
This should be a sign to tell you that surprises are bound to happen at any time.

You always want to be aware of this when analyzing any rental property. Be conservative with your numbers because you’d rather underestimate the cash flow than underestimate the expenses. Try to find out as much information as possible before analyzing any deal.

Many newbie investors only consider mortgage payments, property taxes, and insurance when calculating their cash flow. Not giving themselves enough room to prepare for worst-case scenarios is one of the reasons why some people go into negative cash flow.

Step 7: Get Out There And Take Action!

While it’s easy to obtain knowledge about owning a rental property in this information age, unfortunately, most people stop here.

Now that you’ve done steps 1 – 6, you need to start applying this knowledge and turn it into action. Start looking around for properties to buy and try putting some offers down.

Don’t worry about your offers not being accepted. Just go out there and try it.

You’ll soon realize that it doesn’t matter how many deals you’ve looked at, you just need to find the one that works!

The #1 thing I’ve learned from other real estate investors is that even if you fail somewhere along your journey, the experience you gain from it will be an even greater lesson than anything you can learn anywhere else!

Keep practicing, and when the right opportunity comes, you can grab and hold onto it confidently. I know that the fear of failure can be scary, but the feeling of success makes it all worthwhile.

Hopefully, these steps gave you insight and encouragement to invest in your wealth. Try focusing on your own expenses and savings before looking into anything else. Real estate investing is not a “get rich quick” scheme; it will take time and patience. So do your research, educate yourself, be a sponge, and absorb knowledge from all directions. 🙂

Once you’ve picked the location you want to invest in, analyze as many deals as possible. Look for properties with cash flow before you start speculating on the appreciation gain.

Remember, cash flow is easier to predict than appreciation; appreciation doesn’t give you passive income, so if all else fails, you still have cash flow backing you up. Always be conservative with the expenses and have a reserve fund prepared for each rental.

Finally, be ready to take action and actually buy a rental property once you’ve found a good deal. Don’t be afraid that you’re going to fail, just get out there and start investing in your own future now!