One of the most important steps to make money in real estate is finding rental property. Settling on an income property will trickle down to its ability to generate rental income, positive cash flow, and return on investment. Since finding rental property is so vital to an investor’s success, it must be done meticulously and properly. How exactly is this done? Here are the steps of how to find rental property that will actually make you money.
Preparing Your Finances
The first step of how to find rental property is to get your finances in check. Properly assessing and planning your finances will allow you to determine your budget and ultimately achieve positive cash flow. This step is very important, especially for a beginner real estate investor.
If an investor plans on investing in rental properties through a mortgage, he/she must first become qualified. This requires a good credit score, among other factors. The typical mortgage will need a FICO credit score of 630. There are, however, a few ways to buy the best investment property with a lower credit score.
Learn More: How to Buy Investment Property with Bad Credit Score
Lenders will also require that the real estate investor have up to six months’ worth of mortgage payments in a bank account. There’s also a down payment associated with buying income properties. A down payment of 20% is common for most mortgages.
Get Access to a Heatmap Analysis Tool
The second step of how to find rental property is to use a heatmap analysis tool. A heatmap analysis is a real estate tool that evaluates neighborhoods with investment properties for sale based on several metrics- listing price, rental income, cash on cash return, and Airbnb occupancy rate.
The heatmap analysis tool, which performs real estate market analysis with the help of a rental property calculator, is a must-have when searching for the best investment property.
A real estate market analysis breaks down different locations in terms of investment opportunity. A rental property calculator is used to calculate the estimated expenses and profit of the average income property in that area. Identifying the best place to invest in real estate is the first step to finding rental property that will make money.
Don’t know where to find a heatmap? Don’t look any further! Click here to learn about Mashvisor’s heatmap analysis!
Now, Analyze a Location
After you’ve taken care of financing and obtained a heatmap analysis tool, you may begin finding rental property. The next step of how to find rental property is to analyze different locations.
Regardless of whether you decide to find income properties in-state or out-of-state, you should rely on the heatmap analysis tool. Investing in a local area can be done through word-of-mouth but using a heatmap and rental property calculator makes the search much more efficient.
First, the beginner real estate investor must choose a location he/she is interested in. Once the area is selected, the neighborhoods with potential successful real estate investments for 2019 will be displayed. Each neighborhood can be selected by the investor for further analysis. This will reveal data including median property price, Airbnb and traditional cash on cash return, and Airbnb and traditional cap rate.
Investors can then adjust the heatmap for the parameters they are most interested in. As a result, the heatmap will display the areas’ performances using a color code. The question of how to find rental property becomes much easier to answer with a heatmap analysis in hand.
Narrow Down the Income Properties for Sale to the Most Profitable One
After finding a location that best suits your interests, you can begin to scour for a profitable rental property. This and the following step in how to find rental property will be the deal-breakers when investing in rental properties.
To begin narrowing down your choices from the available listings, you need to be able to view a quick investment property analysis for each. If you use Mashvisor’s heatmap analysis tool, you’ll be given a list of properties for sale after selecting the neighborhood of your choice:
As you can see, they aren’t your typical real estate listings. They include the key values of cash on cash return and cap rate that you can quickly review.
To find the best rental property based on your preferred categories, use property filters. These filters include (but are not limited to) return on investment, rental income, Airbnb versus traditional property, and Airbnb occupancy rate. Once set, the property listings will be adjusted to show you income properties that fit your criteria. If you use Mashvisor’s search tools, you’ll be able to find the most profitable rental property based on all of these inputs quickly and easily.
Break Down the Property
The last, but definitely not least, step of how to find rental property is to analyze the property. As you might have guessed, this is done using real estate software, or a rental property calculator to be precise.
The calculator will allow the investor to conduct an investment property analysis or a breakdown of the property’s data. The investment property analysis is extremely helpful when determining how much profit should you make on a rental property. For instance, the calculator will present the property’s estimated positive cash flow. The real estate investor can view a detailed breakdown of estimated operating expenses, rental income, and more. Better yet, the investor can adjust these values and others such as budget and estimated mortgage payments.
The calculator is also useful for finding rental property by displaying return on investment values. A good return on investment largely varies based on many factors, such as location, property type, financing costs, and more. The calculator will take these factors, some of which are based on the user’s inputs, into account when projecting a property’s return on investment. This way you’ll be sure to find a property that will bring a high ROI.
Related: What Is a Good Return on Real Estate Investment?
Once the real estate investor has completed all these steps, he/she has successfully learned how to find rental property. The final step is to make an offer and purchase the profitable rental property.
Related: Buying an Investment Property: 4 Best Tips to Get an Offer Accepted
How Mashvisor Can Help
Mashvisor can help you perform all the steps necessary when it comes to finding rental property. It will provide unique rental data necessary for how to find rental property that is sure to make you money.
Want to find the most successful real estate investments in 2019? Then click here to start your 14-day free trial with Mashvisor!