When starting a real estate investing career, the first thing that concerns a beginner real estate investor is how to perform a property search. The real estate market offers different types of investment properties. Since the goal of every real estate investor is to make money from his/her income property, the first thing to keep in mind when performing an investment property search is that you need to find investment properties with high expected profitability that generate a good return on investment. With all the listings available in the real estate market, how do income property investors succeed in finding such properties?
In this article, we provide you with 7 helpful tips to successfully perform a property search and find the best investment properties out there. So, without further ado, let’s dive right in!
Property Search Tip 1: Conduct a Real Estate Market Analysis
Conducting a real estate market analysis is the most important step of an investment property search. This is the process of evaluating the real estate investment to explore its expected profits and risks. A thorough real estate market analysis provides real estate investors with a comprehensive picture of not only the subject rental property but also its location and the larger economy like if it’s a buyers’ or sellers’ market. This helps them determine whether or not a certain income property makes a good real estate investment.
A real estate market analysis is also important during the property search process because it allows real estate investors to analyze and compare different investment properties to identify the best one with the highest profitability and expected return on investment. In addition, a real estate market analysis provides property investors with the average listing price of investment properties in a certain area which allows them to avoid overpaying for an income property.
Thus, to perform a successful investment property search, the first thing a real estate investor needs to do is conduct a thorough real estate market analysis.
Related: What is Market Analysis in Real Estate Investing and How Do You Perform It?
Property Search Tip 2: Look for the Best Market
Location, location, location! As a real estate investor, you will hear this a lot throughout your real estate investing career. The location of the rental property affects everything related to it including the purchase price, rental income, operation expenses, and overall profitability. This is why it’s important for income property investors to look for the best real estate market during their property search.
Another important property search tip with regards to the location of investment properties is to not limit yourself to your local market! When looking for the best market in which to buy a rental property, real estate investors need to take a few factors into account. The most important factor is population growth – this determines the demand for rental properties. As a real estate investor, even if you have the best income property but you can’t find tenants to rent it, then you won’t make any money from this rental property. So, make sure you check the rental population while performing investment property search.
Other factors that make a good location for real estate investing are high rental income, reasonable property taxes, a strong economy and job market. If you can’t find these factors in your local real estate market, then it’s best to perform a property search in a different city or even out-of-state. A real estate market analysis will be of great help in determining the best location to buy a rental property.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Property Search Tip 3: Conduct a Neighborhood Analysis
After conducting a real estate market analysis (which will result in finding the best market for investing), the next step is to perform a neighborhood analysis.
Neighborhood analysis is very important for a successful investment property search. Even if a certain city’s real estate market is booming, some of its neighborhoods could still yield a negative cash flow while others generate a positive cash flow. A neighborhood analysis will, therefore, reveal which specific neighborhoods are the best for buying a rental property with a good expected return on investment.
Furthermore, a neighborhood analysis is especially important in an investment property search when choosing the optimal rental strategy. Some neighborhoods yield a higher return on investment for Airbnb rentals and others for traditional rentals. With a neighborhood analysis, property investors can find the best investment properties that match their rental strategy.
Related: Airbnb Investment or Traditional Investment: How to Determine The Optimal Strategy
Property Search Tip 4: Perform an Investment Property Analysis
So, you’ve found a good neighborhood and narrowed down your options of investment properties based on the purchase price that you can afford. Now, to complete the investment property search, a real estate investor has to conduct an investment property analysis.
With an investment property analysis, property investors can find the best investment property that generates positive cash flow and provides a high return on investment. This is done through analyzing cash on cash return, cap rate, rental income, and the occupancy rate of similar investment properties. This will reveal which rental property is most profitable during your investment property search. Therefore, this further allows real estate investors to ensure they’re buying the best investment property in their neighborhood of choice.
Property Search Tip 5: Use an Investment Property Calculator
Seeing as a real estate market analysis and an investment property analysis are important aspects of an investment property search, a real estate investor should make sure to get the most accurate results. Since you’ll be performing these analyses on multiple investment properties, you need a way to do it quickly as well. The answer? Use an investment property calculator.
An Airbnb calculator will be your best friend during your property search. This real estate investing tool will do almost everything from showing you which real estate market is the best for buying an income property, through performing a neighborhood analysis, to estimating the different values for cash on cash return, cap rate, rental income, and occupancy rate!
Mashvisor offers real estate investors the best investment property calculator that is user-friendly and easily accessible online. This tool allows you to calculate the above-mentioned values related to both traditional and Airbnb investment properties. Mashvisor helps income property investors in getting all this information with minimal work and turns 3 months of property search into 15 minutes!
To start looking for and analyzing the best investment properties in your city and neighborhood of choice using Mashvisor’s investment property calculator, click here.
Property Search Tip 6: Use an Online Investment Property Finder
An investment property finder is a digital tool used to find investment properties taking into account property investors’ preferences and search criteria. For example, one real estate investor might be performing a property search for a specific type of investment property in a certain city or with a certain cap rate. This real estate investing tool allows them to easily set their preferences (by using filters) and then provide them with a list of investment properties that match their criteria. Property search can’t get any easier than this!
Mashvisor also provides real estate investors with a property finder tool. Mashvisor makes use of a wide range of data comps, analytics, and metrics to offer lists of investment properties across the US housing market with the highest potential for profits based on their cap rate, cash on cash return, and occupancy rate.
Moreover, Mashvisor’s investment property finder tool comes with the heat map function – which allows you to find investment properties much faster and using nothing but visual cues! Consequently, this makes property search an easy process.
Related: How to Find Investment Properties Using a Property Finder Tool
Property Search Tip 7: Don’t Forget Predictive Analytics
For the longest time, traditional analytics were used as the primary method of analyzing big data. This type of analytics is helpful but is limited in application. Here is where predictive analytics comes in. As the name suggests, predictive analytics accurately predicts the profitability of investments. With the help of predictive analytics during a property search, real estate investors can see the different trends, forecasts, and changes in real estate markets.
Using predictive analytics while performing an investment property search helps real estate investors with pretty much everything mentioned in this article. From analyzing real estate markets and finding the best locations, through a neighborhood analysis, to an investment property analysis.
Mashvisor’s heat map uses both traditional and predictive analytics to help real estate investors find the best performing and predicted real estate markets for any selected metrics. To learn more about our product, click here.
Performing a successful property search is key to a successful real estate investing career. This process might be overwhelming for beginner real estate investors. However, following the right steps and using the best real estate investing tools will make it much easier and more effective!
Remember, Mashvisor offers beginner and experienced property investors with data analysis (for both traditional and Airbnb investments) and a number of real estate investing tools to empower them throughout their careers and help them make the best investment decisions. Sign up with Mashvisor to get hold of these tools and start your property search with confidence!
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.