Updated October 2026. We rewrote these real estate investing do’s and don’ts with the Census Bureau’s third-quarter 2026 vacancy figures and the IRS rules on rental income, vacation homes and 1031 exchanges.
The short list: do run the numbers with a realistic vacancy rate, pick location over looks, and know the tax rules before you buy; don’t overpay because a deal feels rare. As of October 2026, the U.S. rental vacancy rate is 7.6% (Census Bureau, third quarter 2026), up from 7.1% a year earlier, so budget for empty months.
Jump to: 💲 Financing · 🪜 Run the numbers · 📍 Location · 🏠 Taxes · ❓ FAQ
Key takeaways
- National rental vacancy hit 7.6% in Q3 2026, versus 7.1% in Q3 2025 (Census Bureau, released October 28, 2026).
- Rent is taxable income; most rental income and expenses go on Schedule E, per IRS Topic 414.
- Rent out a home you live in for fewer than 15 days a year and you don’t report that rent (IRS Topic 415).
- Since January 1, 2018, 1031 like-kind exchanges apply only to real property.
The old version of this page opened with “real estate is going through the roof, this is the best time.” That aged badly, and it was never good advice. There’s no best time for everyone. There’s a property that works for your money, your time and your tolerance for midnight phone calls about a leaking toilet, or there isn’t. These do’s and don’ts are what we’d tell a friend buying a first rental.
Do: settle financing before you shop
Most investors use a loan, and investment property loans usually cost more than a home loan you’ll live in, with bigger down payments. There are few options worth comparing: a conventional investment loan, a cash-out refinance on property you own, a portfolio lender, or a partner’s cash. Each has its own costs and fine print.
Get a pre-approval for the exact property type you want (single-family, condo, 2 to 4 units). Lenders treat them differently, and some condo buildings won’t qualify at all. Buying in Florida? Beycome Mortgage, licensed in Florida, offers a Florida mortgage pre-approval.
Don’t: count on rent to cover a payment you can’t make without it. Keep reserves for at least a few months of mortgage, taxes and insurance with no tenant.
Do: run the numbers with real vacancy and costs
A rental that “pays for itself” on paper often doesn’t once you add the boring lines. Build a simple monthly sheet:
| Line | What to put in |
|---|---|
| Rent | Comparable rents for the same size and street, not the best listing you saw |
| Vacancy | At least the local rate; nationally 7.6% in Q3 2026 |
| Mortgage | Principal and interest at the rate you were actually quoted |
| Taxes and insurance | From the county and an insurance quote, not the seller’s bill |
| HOA | Dues plus any special assessment on record |
| Repairs and capital items | Roof, HVAC, water heater: set money aside monthly |
| Management | A manager’s fee, or your own hours if you self-manage |
At 7.6% vacancy, a $2,000-a-month rental loses about $1,824 of its $24,000 yearly rent before any other cost. That’s close to one full month.
Don’t: trust the seller’s rent roll without leases and bank deposits to back it. And don’t skip the inspection on an investment property. Our guide to roof inspections explains why the roof alone can wipe out a year of profit.
Do: decide whether it’s for you or for rent
Why are you buying? A home you’ll live in and maybe rent later is a different purchase from a pure rental. The first is about schools, commute and how you live. The second is about rent, vacancy and repairs. Mixing the two leads to a home that’s a so-so rental and a so-so place to live.
Working with property investment consultants or a local agent who knows rentals can help you narrow areas, especially in a market you don’t live in. Ask anyone advising you how they’re paid, and whether they earn more if you buy a particular property.
Don’t: assume off-market deals are always better. Some are. Many are off-market because they wouldn’t hold up to a crowd of buyers comparing them. Check every one against recent sales.
Do: put location ahead of finishes
Perhaps the oldest rule in the property business is location. You can replace a kitchen. You can’t move the house. For a rental, location means the things tenants pay for: commute, schools, grocery stores, hospitals, transit, and how safe the street feels at night.
Look at the block, not just the zip code. Visit at rush hour and on a weekend night. Our post on visiting a home at different times lists what to watch for. For Florida buyers, see four investment locations in Florida, and read up on Florida landlords’ rights and duties before you sign a lease.
Sell smarter
List your home on the MLS from $99
A flat fee instead of a percentage, and $0 to Beycome at closing. You stay in control of your sale.
Sell your home →Buy smarter
Get up to 2% back at closing
On homes listed by other agents, Beycome credits you up to 2% of the price at closing (1% kept, $1,499 minimum; not on FSBO homes or homes listed by Beycome sellers).
Buy a home →Don’t: buy in a place with rules you haven’t read. Many HOAs and cities limit short-term rentals or cap the number of leased units.
Do: learn the tax rules before you buy
Rental income is taxable. IRS Topic 414 says cash or the fair market value of anything you receive for the use of real estate counts, and that you can generally deduct rental expenses. Most owners report on Schedule E. Advance rent is income in the year you receive it, whatever period it covers.
Vacation homes have their own rules. Under IRS Topic 415, if you use a home as a residence and rent it for fewer than 15 days in the year, you don’t report that rent and don’t deduct rental expenses. Rent it more, and you split costs between personal and rental days.
When you sell an investment property, a like-kind exchange under Section 1031 can defer the gain if you buy other business or investment real estate. The IRS notes that since January 1, 2018 it applies only to real property, not equipment or other personal property. Rules on timing and identification are strict; use a qualified intermediary and a tax pro.
Don’t: expect the home sale exclusion on a rental. The $250,000/$500,000 exclusion is for your main home. Our page on taxes on home sale money explains the tests, and buying property with an LLC covers the ownership side.
Do: keep buying and selling costs low
Transaction costs eat investment returns, because you pay them on the way in and the way out. On the buy side, Beycome’s buyer program has no upfront fee: Beycome keeps 1% of the price (minimum $1,499) and credits the rest of the buyer-agent commission at closing, with lender approval. On a $400,000 home with 3% offered, that’s $8,000 back. It’s open to every buyer on homes listed by other agents; the credit can’t apply where no buyer-agent commission is offered, like most FSBO homes, or on homes listed by Beycome sellers.
When you sell, a flat fee MLS listing starts at $99 with $0 due to Beycome at closing. More than 22,000+ homeowners have used Beycome, saving over $225 million. If you’re ready to grow, see how to rent out your first home when you buy a second or the beginner’s guide to flipping apartment buildings.
Real estate investing questions
What are the biggest don’ts in real estate investing?
Don’t skip the inspection, don’t trust unverified rents, don’t ignore HOA and city rental rules, and don’t buy without reserves for empty months.
What vacancy rate should I use?
Use your local rate if you can find it. Nationally, the Census Bureau put rental vacancy at 7.6% in the third quarter of 2026.
Is rental income taxable?
Yes. The IRS treats rent as income and lets you deduct rental expenses; most owners report on Schedule E.
Can I defer taxes when I sell a rental?
A Section 1031 like-kind exchange can defer the gain if you buy other investment or business real estate and follow the IRS rules.
Do I need a realtor to buy an investment property?
No, it’s not required; it’s your choice. An agent can find comps and handle offers. You can also buy on your own, or use a buyer program that credits part of the commission back.
Is location still the most important factor?
For most rentals, yes. Tenants pay for commute, schools and services nearby; finishes can be changed later.
The 3% figure is an example only. Commissions are not set by law or NAR rules and are negotiable; sellers choose whether to offer buyer-agent compensation; such offers are not shown on the MLS since August 17, 2024. Buyer credit: Beycome keeps 1% of the price, minimum $1,499; the rest of the buyer-agent commission is credited at closing with lender approval; not on FSBO homes or homes listed by Beycome sellers.
Beycome Mortgage LLC (NMLS #2523620) is licensed in Florida only. Beycome prices as of October 2026 and subject to change. “$0 at closing” means no Beycome fee at closing. General information, not tax, legal or investment advice.
Sources
- U.S. Census Bureau, Quarterly Residential Vacancies and Homeownership, Third Quarter 2026, read October 28, 2026.
- IRS, Topic no. 414, Rental income and expenses, read October 28, 2026.
- IRS, Topic no. 415, Renting residential and vacation property, read October 28, 2026.
- IRS, Like-kind exchanges – Real estate tax tips, read October 28, 2026.
- Beycome, buyer program terms, October 2026.
Disclosure & Disclaimer
Beycome provides real estate services through affiliated licensed brokerages and has a commercial interest in the services and business models discussed on this blog. Content reflects Beycome’s perspective and may promote our services; it should not be treated as independent or neutral reporting.
Articles are provided for general informational and educational purposes only, not as financial, tax, legal, or investment advice or a recommendation for your particular situation. Reading this blog does not create a brokerage, advisory, or other professional relationship.
Information, opinions, pricing, service descriptions, and comparisons reflect the sources and information available when an article was published or last updated and may change. Although we aim for accuracy, we do not guarantee that all content is complete, current, or applicable to your circumstances. Laws, market conditions, and service availability vary by location. Examples and estimated savings are illustrative, depend on stated assumptions, and do not guarantee individual results.
Verify relevant information directly and consult qualified professionals before making decisions. Beycome services are subject to applicable agreements, eligibility requirements, and state-specific terms.
