Every homebuyer and real estate investor would love to get a great bargain on cheap houses for sale. Buying cheap houses and renting them out can result in a good return on investment. However, even in a slow real estate market, finding cheap multi-family homes, single-family homes, apartments or condos can be very difficult. That’s why real estate investors need to have a plan in place to find good deals- anytime, anywhere. To help you form that plan, we have put together 10 great tips for buying cheap houses for real estate investing:
Tip #1. Use Mashvisor’s Real Estate Investment Tools
A heatmap is an analysis tool that displays neighborhood data in visual form. This tool analyzes neighborhoods using filters such as listing price, return on investment, rental income, and Airbnb occupancy rate. Using the listing price filter, a real estate investor can easily find a neighborhood with very affordable investment properties for sale. Even better, you can keep using the other filters to ensure you find an affordable neighborhood that is also profitable!
On the other hand, the property finder tool uses filters such as miles and cities, budget and rental strategy, and bathrooms and bedrooms to help you find ideal investment properties that are cheap and make money.
Tip #2. Look for a Fixer-Upper
Also known as distressed property, fixer-uppers are properties that are cheap because they require a lot of renovation and repair. While such investment properties come with a degree of complications and risk, they can be a great real estate investment. One of the best ways of finding distressed homes is by simply driving (or walking) around your target neighborhood. Here are some of the signs to look for when searching for distressed property:
- Overgrown grass
- Broken or boarded up windows
- Uncollected mail or newspapers
- Code enforcement signs
- Deferred maintenance
Once you’ve found a suitable property, contact the property owner and negotiate the price. During the negotiation process, be sure to consider the potential repair and renovation costs. You want to ensure that you are actually buying cheap houses, even with the added renovation costs.
Tip #3. Find a ‘For Sale by Owner’ Property
Some property owners place a ‘For Sale By Owner’ (FSBO) sign in their front yards hoping to attract potential buyers. Quite often, such homeowners don’t even know what their property is really worth. Others are desperate to make a sale quickly, and would thus be willing to sell at a price below market value. Besides driving around the neighborhood, you can also find FSBO properties on listing sites such as Craigslist or Zillow.
Tip #4. Look Outside the City (or State)
Housing is usually much cheaper in less popular neighborhoods outside major cities. Therefore, to find affordable real estate investments, you should be willing to consider out of state properties. Look for areas that are considered the fastest-growing suburbs in the US. For example, college towns would be ideal places for buying cheap houses and renting them out.
Tip #5. Consider Purchasing a Foreclosed Property
When a property owner fails to settle a mortgage payment for a specified period, the lender will eventually repossess the property and evict the occupants. When the home is vacant, the lender will then list it for sale on the market. Since lenders are just interested in recovering their money, they are likely to offer huge discounts in order to sell the property quickly. Therefore, cheap foreclosed homes are some of the best deals you will ever find. You can find a foreclosure by visiting banks in the area or consulting local real estate agents.
Related: 6 Benefits of Foreclosure Investing
Tip #6. Visit the Mashvisor Property Marketplace
Mashvisor’s property marketplace is one of the best places to find a wide range of affordable investment properties that don’t appear on your average property listing site. Not only can you find foreclosures here, but you can find bank-owned homes, short sales, and auction properties as well. Buying through short sales and real estate auctions are great strategies for finding cheap homes. This marketplace comes with a built-in investment calculator that you can use to check metrics such as cap rate, cash on cash return, cash flow, and occupancy rate.
Tip #7. Check Days on Market
Another great strategy for how to find real estate deals is to look for homes that have remained on the market for a long time. Owners of such income properties might be willing to sell at a low price because they are tired of waiting for a buyer. Most listings indicate the days on market.
Tip #8. Use Your Network
Networking is another great strategy for finding and buying cheap houses for investment. Tell everyone (family, friends, co-workers, and neighbors) that you are thinking of buying cheap houses. Someone might just hear about a landlord that is selling but hasn’t had time to get their home listed. Such word of mouth referrals is a strategy for buying rental property that will save you costs such as broker fees.
Tip #9. Find a Real Estate Wholesaler
Working with a wholesaler is another great strategy for buying cheap houses and renting them out. A wholesaler is basically someone that looks for great real estate deals and then sells them to buyers for a small markup. Since wholesalers find property deals through good negotiation and heavy marketing, they can pass on significant savings to you. However, you need to realize that most wholesalers only deal with cash buyers. If you are planning to take out a mortgage for buying cheap houses, you might find it difficult to get a deal. Wholesalers can be found on online real estate forums, as well as those ‘I’ll Buy Your House for Cash’ roadside signs.
Tip #10. Make Your Move at the Right Time
When it comes to buying cheap houses, timing is everything. Therefore, if you are searching for a great real estate deal, you need to move very fast. Set up a Google alert to notify you of any new deals in the housing market. If you find an FSBO or distressed property, get in touch with the homeowner immediately. Talk to real estate agents often to find out if anything is up for grabs. Meanwhile, if you are planning to take out a mortgage, have a pre-approval letter from the lender ready. Learn the real estate cycles and understand when and where buyer’s markets hit. The faster you act, the higher your chances of clinching an amazing deal.
As you can see, there are plenty of ways to find cheap real estate. Whichever strategy you choose for buying cheap houses and renting them out, you will enjoy a good bargain and get a good return on investment. The key is to use a few of the tips above in your strategy and to keep at it!