When Buying a Rental House Give Yourself a Margin For Error

A big problem with novices of real estate investments is to not plan for tough times.  

An investor should make sure the price being paid is supported by the current rent.  If all bills cannot be covered including the mortgage you are creating a recipe for disaster.  If rents drop a bit due to a soft market or a vacancy is extended for some reason, can you handle it?

Investors should also make sure they don't borrow so much on the property that there is a chance to go into a negative equity situation.

Make sure the investment can stand on its legs in the current situation, not needing future rent increases to handle the expenses and debt.  In the current market plan on holding the property at least 5 years.  

Good luck with your real estate investing.