Thanks to all who have emailed asking if I have specific advice for folks who are new to this game. Here's what I tell first time real estate investors they need to do.
1. Find a lender -- one with experience doing investor loans.
2. Find an experienced agent who specializes in investment properties and who is willing to provide the background data you need to make an informed decision as well as educate you.
3. Pull the trigger. Make the purchase. Don't condemn yourself to the land of "woulda, shoulda, coulda."
Those are the broad strokes. Now. A few fine points. Before you ever buy a property, you have to get into the mind space of being a landlord. Far too many first timers think this is just a matter of buying a property and turning it over to a management company. As I've said in the past, the best and most successful landlords are proactive.
I'd suggest you go back and read my posts Landlord 101: A Mini Refresher Course and Tenant Qualification: Credit Scores and Due Diligence. This is not a passive game, and that's something you need to understand from the beginning. Other past post that may help are: Leveraging v Cash Purchase; Cash Flow v Appreciation; Single-Family v Multi-Family; and Location Education.
Also, get out of the mindset of, "I don't know" or "I can't understand." You simply cannot afford to go into real estate investing intimidated by the process. Of course, no one wants to sound like a fool, but if you have an aversion to asking questions, get over it now.
You're going to hear a lot of "foreign" terms. There are a lot of numbers involved. Take notes and if you don't understand what's happening and you're uncomfortable, stop. Get the terminology clarified and make sure you know exactly what's on the table before you sign anything. You're not going to look stupid. You will look like a cautious and thoughtful business person. And that's not a bad reputation to have.
Finally, try to overcome the larger fear factor in regard to the economy. It's not easy. If you turn the news on, you're going to hear scary things about job losses and the housing market. The truth of the matter is, however, that if fewer people are buying that means more people are renting, which is good for you. If you have your financing in place and you know the total cost of owning your rental property weighed against what it will earn for you, you're going to be okay.
Will you make mistakes with your first property? You bet you will. We all have. And we've stayed in the game long enough not to repeat them and to have a good laugh at our own expense. Real estate investing is all about education -- the kind you get on your own and the kind you get from a well-chosen lender and a well-chosen agent.