How to Buy A Rental House

I try to find properties that are family size. 3 or more bedrooms and 2 or more baths with garages. Never a pool..too dangerous.

Next I prefer houses that are already rented out, it gives me an idea of the rents. Naturally, some realtors will always say that its under priced. don't believe it. Next I research rents with sites like craigslist, and other local sources.

finally, I take the rent and multiply it by 12 months to get the gross rent multiplier. This is simply how much rent should be collected each year. From that I multiply it by 5 and that tells me what I would like to pay for it. 5 is a bit hard to come by, I will go as high as 8. I only go to 8 if it's financed by the owner with little or no money down and the interest rate is 7% fixed for 5 or more years. Anything over 8 and I simply move on. Its simply a numbers game. When in doubt talk to a CPA not a realtor or mortgage person, these people only benefit if you buy it. Other factors should be considered as well, but that's where I start.