If you’re looking to set yourself up for retirement, real estate is still considered one of the safest investments you could make. Like any investment, there can be risks involved, so it’s best to do your research on the property before diving in.

I’ve been there. It’s your first investment and you want everything to go right. You’re excited that this is finally going to happen, but at the same time, you’re probably overwhelmed by the mammoth task ahead of you.

There’s a lot to learn, but before you get confused with all the technicalities, let me give you some basic tips about property investment from someone who’s been in your shoes—you know, a real estate virgin.

1. Get Your Finances In Order

Talk to your bank to find out exactly how much your investment loan is going to be before you begin the search. Knowing exactly how much you can spend helps you make wise decisions and avoid going into more debt than you can afford.

First things first: make sure you can afford an investment property in the first place. If you have any other debts such as student loans or unpaid medical bills, you may want to put off investing in property for now until you’re able to pay them off.

On the same note, check your credit report. If there are any mistakes on it, get them resolved as soon as possible. The better your credit score, the faster you can get that loan—and the better the terms will be.

2. Consider Ongoing Costs

Repairs, maintenance, and insurance rates are just some things that can’t be avoided. Don’t underestimate the cost of these things. When it comes to repairs or renovations, it’s probably best to double whatever you think it would cost—in time and money—and factor that into your budget.

You can avoid a lot of problems by overestimating instead of underestimating. In fact, it’s probably best to avoid purchasing a fixer-upper unless you have a really good contractor who can do the work for cheap.

3. Location! Location! Location!

Avoid investing in the best property on the worst street. Instead, go for the not-so-great house on the best street.

Why?

The not-so-great house can be fixed and improved upon, making it more valuable. The best house in a bad neighborhood will always be in a bad neighborhood (well, it might not be bad forever, but at least in the immediate future—which is all you should be concerned about right now).

Remember, you want your property to increase in value in case you want to sell it later. And there’s nothing that will boost value quicker than being in a prime location!

4. Get Out Your Calculator

If you intend to rent out your property, take the “1% rule” into consideration. This rule means that the income produced from the property each month must be 1% of its purchase price. This helps you to decide whether the price you’ll pay is worth it or not.

For example, if the property you intend to purchase is $200,000, then income earned each month from rentals should be $2,000. If the comps in the neighborhood don’t support a rental rate that high, then it’s likely not a good investment.

5. Start Small

As newbies, we can sometimes be a little overeager to get the property of our dreams. But as with all investments, it’s often best to play it safe before challenging yourself.

When it comes to property investment, purchase a good, solid home before choosing a riskier property. You can always sell it off and work your way up to that mansion once you know more about the real estate market.

6. Use Your Head, Not Your Heart

I know, I know, so many temptations! Stunning views, indoor theater, heated pool, and other great features can often tempt you to give in to your heart’s desires and purchase that dream property. But remember, you won’t be living there!

As an investment property, the main thing you should focus on are features that will sell and be easy to maintain. Be smart and consider the costs involved in maintaining or renovating such tricked out properties. Weigh the pros and cons before making a final decision.

7. Inspection!

Before signing the contract, make sure you have the property inspected by a professional. It will be important to budget for the inspection, and to plan ahead. Most inspectors are booked out by at least a few weeks, so allow enough time to receive and review the inspection report before making any decisions. Otherwise, you risk unanticipated and expensive repairs for issues that you didn’t even know existed.

Property Investment: Be Realistic

The real estate market is complex and ever changing. Keep your expectations reasonable, enlist professional help, and take your time to really study the market.

Chances are you’re not going to make huge sums of money on your first investment, so be cautious when choosing the property—you have plenty of time to increase your real estate holdings as you gain more experience and capital!