Most people know that investing in real estate is a good way to increase long-term wealth, but actually buying your first investment property can be intimidating. If you're interested in investing in real estate, your best bet is starting out with a single residential property; one single-family home will be much easier to manage while you're learning the ropes of real estate investing compared to investing in a multi-family or commercial property. One of the biggest keys to a successful real estate investment is to be prepared and know what you are doing. Use the following tips to help you with buying your first investment property.

Understand the Real Estate Market

Before you even begin to look at potential properties that you may be interested in buying, it is absolutely essential to understand your local real estate market. When you want to invest in a single-family home, it makes sense to wait until it's a buyer's market. In this type of market, there is a large supply of homes for sale and a smaller pool of buyers, which can bring prices down. It doesn't make sense to buy your first investment property during a seller's market since inventory will be scarce and prices will be high. Finding a great deal can help ensure that you already have equity in your investment property when the transaction closes.

Evaluate Your Budget

Investing in real estate should not be seen as a way to get rich quick. Thus, if you are planning to buy an investment property, it is absolutely essential to ensure that you can afford to pay for a home and maintain it for an extended period of time. Many investors rent out their residential properties to offset the cost, but you should not plan on a set amount of rental income when you're making a buying choice. Properties can be vacant at times, and from time to time your monthly income from rent can be wiped out if you need to make repairs or perform maintenance. Make sure that you evaluate your budget and purchase an investment property that you can comfortably afford.

Work with an Experienced Real Estate Agent

A good real estate agent is a valuable resource for an investor, especially one who is buying his or her first investment property. Ideally, you should look for a real estate agent who specializes in working with investors, or who has worked with numerous investors in the past. Your real estate agent will be able to tell you about great deals, such as foreclosures, or homes with very motivated buyers who may be willing to sell below market price.