Many people aspire to be real estate property owners and make money with real estate. Besides having a tangible asset, investors also enjoy residual (rental) income and price appreciation from their real estate investments. However, acquiring real estate investment properties is easier said than done. Finding the best rental properties can be a costly and time-consuming affair.
Here are some surefire ways of finding the best real estate investments that fit your criteria:
Related: Where to Look for the Best Real Estate Investments for 2018
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Learn About Real Estate
Before starting their investment property search or buying any real estate investment properties, investors should spend hours learning about how real estate actually works. Anyone that is not familiar with terminologies such as cap rate, appraisal, closing, amortization, cash reserves, equity, listing, and cash on cash return has no business getting into real estate.
The good news is that there are numerous books, magazines, and websites out there that can teach investors everything they need to know. Mashvisor is an especially excellent source of information on real estate investing for beginners. The blog covers topics such as how to find investment property, investing in real estate rentals, property management, and how to use the real estate investment calculator.
Besides reading, investors should spend time with experts in the industry and learn from them. This could be through attending industry events or even volunteering for an internship in a real estate company. Experienced investors that have been in the game for several years could also be a great source of wisdom for beginner real estate investors.
Related: Getting Started in 2019: How to Learn About Real Estate Investing
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Establish Your Investment Property Criteria
When looking for a good investment property, investors should have a written real estate investment property profile that can be shared with prospective sellers, real estate agents and partners. This profile must have a description of the target property the investor is looking for. The real estate market is wide and includes niches such as single family homes, multi family homes, and condos. Once the niche has been selected, the target property description could be something close to this:
“Single family homes with 3 baths and 5 bedrooms in the 40293, 40256, and 40294 zip codes. Target market price is between $230,000 to $300,000. Ideal properties are convenient to shopping and schools. Should come with a spacious front yard and garage”
The investment profile should also include target terms (numbers) that are important to the investor. This could appear as something like this:
“Target property should have a cash on cash return of at least 7%. The rental income after financing should not be less than $300 per month. Finally, the target purchase price should fulfill the 1% rule”
With time, investors can adjust the rental property investment criteria according to their changing needs.
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Select a Target Market
The target market an investor chooses can make or break their venture into real estate investment properties. It is therefore very important to think critically before making this decision. In most cases, it would be advisable to start by looking for properties close to home. This gives investors an advantage since they are familiar with the market. If the local properties are not appealing, investors can then consider other satellite locations. Locations on the outskirts of major towns or cities usually have more affordable investment properties.
Whether an investor decides to look for real estate investment properties close to home or elsewhere, they should do a market analysis before making a buying decision. Some of the factors that need to be considered include:
- Population growth
- Rent/price ratio
- Convenience
- Crime and safety rates
- Walkability
- School districts
- Neighborhood HOAs and covenants
- Public transportation
- Local infrastructure, taxes, and laws
- Barriers to supply
However, finding the right property in the best location can be quite a challenge. In most cases, investors have to go through the long process of looking at various sites to learn more about the area and search for the best investment properties. A faster way of analyzing the market is by using a heatmap. Mashvisor has a heatmap analysis tool that investors can use to identify locations that have the best rental income, cash on cash returns, Airbnb occupancy rates, and listing prices.
Mashvisor’s Heatmap Analysis Tool
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Leverage Your Network
One of the best and fastest ways of finding real estate investment properties is by leveraging relationships with people in the real estate industry. This could be title agents, property managers, real estate agents, attorneys, commercial agents, private money lenders, contractors, and fellow investors. Most of these professionals have inside information and can direct investors to the best real estate investment properties that will yield a good return on investment. In addition, they can help beginners avoid pitfalls when looking for the most profitable investments. Investors can form relationships with such real estate professionals through social media networks such as Facebook and LinkedIn, or through attending meetings at Real Estate Investment Associations (REIAs), landlord associations, and other real estate-related gatherings.
Related: How to Build and Maintain a Real Estate Investment Network
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Drive Around
The walk/drive for dollars strategy for finding real estate investment properties gives investors the chance to be the first to get in touch with a prospective seller. It basically involves driving around your target market and looking for signs of neglected or distressed homes. If it appears that it has been months or weeks since anyone took care of the property, the owners might just be willing to sell. At times, investors can identify an investment property for sale simply through a ‘For Sale By Owner’ (FSBO) sign in the front yard. If the property is already vacant, investors could get information about the owner from the neighbors. By being the first to approach the seller, investors are likely to find the ideal real estate investment properties faster.
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Use an Online Property Finder
Most successful investors use real estate investment tools to find the best opportunities in the market. Using such technology makes the process stress-free and inexpensive. One of the must-have tools for investors is an online property finder. Using this tool to identify real estate investment properties is a more effective strategy than reading newspapers, searching online, or driving around a neighborhood. Mashvisor comes with a property finder that allows investors to find a property that matches their preferred criteria such as cap rate, rental income target, and cash on cash return. Visitors can gain access to this tool after subscribing to Mashvisor.
Do you have a free Mashvisor account? Use our Property Finder to find lucrative investment properties that match your criteria in a matter of minutes!