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    Home - Real Estate - Seven Steps to Buying a Rental Property in Today’s Market
    Real Estate

    Seven Steps to Buying a Rental Property in Today’s Market

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    Seven Steps to Buying a Rental Property in Today’s Market
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    15% ROI, 5% down loans!”,”body”:”3.99% rate, 5% down! Access the BEST deals in the US at below market prices! 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    How do you buy a rental property in 2025 that actually performs—one that generates cash flow, mitigates market risk, and puts you on a sustainable path toward financial freedom?

    It’s a question I hear often, and it’s a fair one. The market today isn’t what it was in 2015, 2020, or even 2023. Rates are high, prices in some metros have corrected, and economic uncertainty is forcing investors to think more critically before deploying capital. But despite the noise, it’s still absolutely possible to buy rental properties in this market and do it profitably.

    While macro conditions are always shifting, the fundamentals of smart investing remain consistent. What has changed is how you apply those fundamentals in different cycles.

    So, in this guide, I’ll walk you step-by-step through how I’d approach buying a rental property in 2025—focusing on risk-adjusted returns, market timing, and how to succeed in a more volatile environment.

    Step 1: Start With Strategy

    Too many new investors start by looking at properties without knowing what they’re trying to accomplish. I know that looking at listings is the fun part, but it’s always better to take a step back and do some strategic thinking before you start targeting properties.

    The first step before any investment is to get clear on your investment goals. Are you primarily focused on cash flow to support your monthly income? Do you want to invest for appreciation in a high-growth market? Or are you targeting tax advantages and long-term equity buildup?

    Strategy also involves defining your involvement level. Are you looking to be hands-on and self-manage a local single-family rental? Or would you prefer a more passive approach with a property manager in a different market?

    Once you’ve defined your goals, take the time to study macro trends on a national level and in your market. Check out our On The Market podcast and BiggerPockets Market Finder to ensure your strategy is aligned with market realities. You may want to be a cash flow investor in San Francisco, but that doesn’t always work, and sometimes, you need to adjust parts of your strategy to account for the realities on the ground. 

    Step 2: Choose a Market and Neighborhood 

    Given the strategy you defined, you need to pick a location (both a market and a specific neighborhood) that aligns with that strategy. This is always the case, as investment performance is highly tied to location, but it’s especially true in 2025. 

    We’re in the midst of a softening market, where prices are likely to drop in some major metros. This doesn’t mean you can’t buy there, but it does mean you need to know the dynamics of your neighborhoods and need to buy under market value. 

    My recommendation is to focus on markets that have strong long-term fundamentals like job growth, household formation, and a diversified economy. Even though prices may flatten or even fall in some of these markets, locations with strong fundamentals will be insulated against the biggest risks, and will rebound the quickest in the future. 

    All that said, of course, you don’t want to buy a property that is likely to decline in value, even if you’re in a great market, which is why you need to focus on a buy box that mitigates your downside risk. 

    Step 3: Build a 2025-Proof Buy Box

    A buy box is a critical part of buying a rental property in any condition, but in 2025, you need to add some specific criteria. 

    First, build around the normal elements of a buy box: price range, asset type (SFR, duplex, small multifamily), age and condition, and minimum expected cash flow. (I need a minimum of 2%-3% CoCR after stabilization for an excellent asset and a higher CoCR for lower-appreciating properties.) 

    There is a time and place for risk-tolerant investors to buy for appreciation, but I wouldn’t recommend that in this type of market. You need properties that cash flow to mitigate risk and realize the biggest upsides in today’s market. 

    You might also like

    Step 4: Build Consistent Deal Flow

    Finding good deals in 2025 still takes effort. But the good news is, there’s less competition than in recent years—and more ways to find motivated sellers. This is the positive trade-off of investing in a correcting market. 

    Start by building relationships with investor-friendly agents, joining local real estate investor groups, and mining for off-market opportunities. The easiest way to find deals? BiggerPockets Deal Finder evaluates cash flow potential for you in an instant and is a great way to get massive deal flow. 

    The investors getting ahead this year are the ones who are proactively looking to find value. There will be a lot of junk and bad deals out there in this transitioning market, but if you look at enough leads, there will be opportunity. 

    Step 5: Analyze and Negotiate With Discipline

    Now that you’ve got potential deals coming in, it’s time to run the numbers—and this is where I see too many people lose the plot.

    Use the BiggerPockets Rental Property Calculator or your own spreadsheet to run a conservative pro forma. Include all expenses: taxes, insurance, capital expenditures, repairs, property management—even if you plan to self-manage. Don’t assume perfect conditions. 

    The key in 2025: Build in a margin of safety. Prices in many markets are softening, and I wouldn’t assume future appreciation in the next year or so. 

    If the numbers work under conservative assumptions, move on to negotiation. In 2025, many sellers are motivated. Days on market are up. Price cuts are common. You can (and should) negotiate for discounts, seller credits, rate buy-downs, and even seller financing in some cases. Sellers want certainty—use that to your advantage.

    Look for properties where you can buy at a discount to recent comps. For example, if you think prices could fall 2%-3% in your market (a reasonably conservative estimate for most metros), then only consider properties where you can negotiate to that level. 

    And please, don’t count on a refinance! You need to assume current rates during your analysis, and if they happen to fall, that’s just a bonus. 

    Step 6: Perform Real Due Diligence

    Once your offer is accepted, slow down and do your due diligence. Get a full inspection and price out a scope of work if you’re doing a value-add project. Review utility bills, verify rent rolls, and confirm property tax history. This is another benefit of 2025: You can take your time, and don’t need to rush to close. 

    Make sure you’re clear on title issues, zoning, insurance coverage, and local landlord laws. In this market, you can afford to walk away if something doesn’t check out. You’re not bidding against 20 offers, like in 2021. Use that leverage.

    Step 7: Protect Yourself Against Uncertainty

    This isn’t really another step, but just a reminder as you get close to closing on a deal in 2025, a few checklist items to remember: 

    • Buy for cash flow, not appreciation.
    • Keep six to 12 months of reserves per property.
    • Don’t overleverage.
    • Avoid over-renovation.
    • Invest in neighborhoods with long-term demand.
    • Stay flexible with exit strategies.

    Final Thoughts

    Rental properties remain one of the best long-term wealth-building tools available, but 2025 isn’t the year to wing it (no year is). The opportunities are there—I’m seeing them myself! 

    But you need skill, strategy, and a willingness to adapt to take advantage. You shouldn’t be scared, but you do need to be smart and patient. If you play it right, this is the type of environment where big long-term profits can be made.

    A Real Estate Conference Built Differently

    October 5-7, 2025 | Caesars Palace, Las Vegas 
    For three powerful days, engage with elite real estate investors actively building wealth now. No theory. No outdated advice. No empty promises—just proven tactics from investors closing deals today. Every speaker delivers actionable strategies you can implement immediately.

    BPCON2025 blue logo vertical 3000W

    Dave Meyer is a real estate investor and the VP of Data & Analytics at BiggerPockets. Follow him @thedatadeli.

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