Becoming a real estate investor to make extra cash is a dream everyone has. After all, there is nothing better than owning a rental property that pays for itself and brings in extra income. However, wanting to become a real estate investor is one thing and learning how to find the best place to buy investment property is another.
Succeeding in the real estate business is neither a work of luck nor a complex task. Here, we gathered all the necessary tips to help you find the best place to buy investment property in the current housing market.
Related: Location Location Location: What Makes for the Best Place to Invest in Real Estate?
Tip #1 Know Your Finances
Before buying a rental property, ask yourself some questions to really assess your financial ability to invest in an income property. Can your finances handle such a commitment? Do you have a steady income and some savings? Are your debts paid off? How much will you be able to afford? It is important to ask yourself these questions and to forecast your financial risk. Nonetheless, investing in real estate can be done with little or no funds at all.
Read more about how to invest in real estate with no money here.
Why does this matter when trying to find the best place to buy investment property? Well, once you know what you can and can’t afford, you can start looking for a real estate market that’s right for you. For example, if you live in New York City, property prices may be outside of your budget, even if you go for a mortgage. You might find a place like the Philadelphia real estate market more affordable and more profitable for buying an investment property.
Tip #2 Follow the Latest Real Estate Trends
Being up to date with the latest real estate trends is important when looking for the best place to buy investment property. Furthermore, understanding the political and economic climates is key to deciphering real estate housing trends.
What is the supply and demand for rental properties in your area? If there are a lot of real estate properties for sale and not many people are buying, then it is called a buyer’s market. A buyer’s market is one where market conditions favor the buyer and prices tend to drop.
On the other hand, the opposite happens when not enough properties are available on the market and a lot of people are looking to buy homes for sale. This situation is known as a seller’s market since market conditions favor property sellers.
When choosing the best place to invest in real estate, you will ideally want to look for a buyer’s market to ensure you get the best deals.
Tip #3 Search for Real Estate Market Indicators
What indicators should you search for when looking for the best place to buy investment property? Population growth and job growth are important indicators that can tip supply and demand in your favor. The best place to buy investment property would be an investment location with positive above-average population growth and positive job growth. A growing population indicates an increased demand for housing and rental properties, while job growth indicates a healthy economy where more and more jobs attract more people to the housing market.
Tip #4 Use a Heatmap Tool
Using a heatmap analysis tool is a great way to save time and focus on what’s most important- finding the best place to buy investment property! Using Mashvisor’s heatmap analysis tool, you can find locations with affordable real estate properties that match your preferences.
This tool is a visual representation of a geographical location that ranks real estate market research metrics using different colors to represent different ranges. For example, the heatmap analysis tool can rank neighborhoods according to cash on cash return, an important investment performance indicator when looking for the best place to buy investment property.
The tool also allows you to filter neighborhoods based on listing price, traditional vs Airbnb rental income, and Airbnb occupancy rate. It’s a fast and easy way to perform a neighborhood analysis.
Click here to try out the heatmap analysis tool for yourself.
Tip #5 Perform a Thorough Real Estate Market Analysis
A real estate market analysis (or comparative market analysis) studies the current market values of real estate properties in order to determine the market value of another property. Real estate investors use this analysis to make the best real estate investment decisions. In other words, conducting a real estate market analysis allows you to have an overview not only of your investment property itself but also of the neighborhood and surroundings.
Related: What Are the Best Tools for Real Estate Market Analysis?
Tip #6 Find the Best Place for Buying Investment Property with Mashvisor
Mashvisor is the ultimate tool when it comes to real estate investing. Looking for the best place to buy investment property is made easier with our real estate investment tools, including an Airbnb calculator. We use our rental property calculator to provide you with the latest trends and updated stats on the best places to invest in real estate including prices, cap rates, cash on cash return, occupancy rates, and much more.
For the latest trends in the US housing market, make sure to follow our blog.
Once you choose any city on the lists we release, you can use our tools to perform neighborhood analysis (heatmap tool) and investment property analysis (rental property calculator).
To start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after, click here.
Tip #7 Invest in Landlord-Friendly States
When it comes to owning a rental property, different states have different rental laws. Landlord-friendly states are those with landlord-tenant laws that swing in favor of the landlord, making them the best places to buy a rental property. Therefore, when looking for the best place to buy investment property, you should first check the local rental laws.
The short term rentals market (characterized mostly by Airbnb rentals) is under watch as more cities go for strict Airbnb regulations. Investing in Airbnb rentals in heavily regulated cities is therefore not advisable.
With these 7 tips, you should be able to find the best place to invest in real estate and start your rental business on the right path.