Ever come across an investment property for sale and wondered “is it a good time to start investing in real estate?” Well, don’t wait any longer because the timing could not get any better than now!
Spring is typically the best time of year to buy a house. During this season, people are looking at houses, closing on houses, and talking about inventory. But why is spring the prime time for real estate investing?
Why Now is a Good Time to Find Investment Property for Sale
- The season of new beginnings: It might sound cliché, but it’s true—there is something inherently motivating about spring. After a long winter, the longer days and warmer weather make consumers think about new purchases, whether it’s a new car or a new home. For whichever reason, spring is the season when buying investment properties is at its height!
- Demand and supply are higher: Throughout winter, buyers have been sitting inside, staying warm, and looking at online real estate resources. They’ve either realized that they need more space or less space. Either way, they’re ready to move! This demand for investment properties creates an active real estate market.
- Better inspections: In wintertime, home inspectors may not be able to access the roof, fully inspect the HVAC, or thoroughly check outdoor systems like an in-ground sprinkler system or a pool. In springtime, on the other hand, inspectors can see and fully examine the investment property for sale, leading to a more reliable home inspection.
- Follow the money: People feel better about their finances in spring for a number of reasons. Holiday bills have been paid, school expenses are on the decline, and buyers may have gotten a big tax refund. As a result, springtime buyers have more cash to put into their income property purchase. Meanwhile, homeowners may have been paying big utility or repair bills during the winter, increasing their motivation to sell, especially if they’re downsizing.
The only drawback to buying an income property in spring is the fact that there’s more competition. Because there are more buyers, it’s harder for a real estate investor to find a bargain (these usually come up during wintertime). Nonetheless, this is often offset by more inventory.
What to Look for in an Investment Property for Sale
So, you’ve made the decision to start searching for an investment property for sale or you’ve come across one, how do you determine whether or not this property will make a good and profitable investment? Generally, in real estate investing, property investors look for these factors in the investment property for sale to classify it as a profitable investment:
Location, location, location! This statement can’t be stressed enough in real estate investing. Where the investment property for sale is located affects everything related to it from the rental income, operation costs, cash flow, to appreciation – all of which are other factors that determine the profitability of income properties!
The best locations for real estate investing are those that allow for a good standard of living, such as those with reasonable income property taxes and good insurance, high rental income, and are attractive to tenants. If you find an investment property for sale in such locations, don’t hesitate to make a purchase!
Positive Cash Flowing
It goes without saying that the main goal of every real estate investor is making money from the income property. To start making money, property investors must invest in income properties that generate positive cash flow. Positive cash flow is when the incoming cash flow outweighs the outgoing cash flow spent on managing and maintaining the income property.
Stay away from income properties that generate a negative cash flow – you’ll start losing money instead of making money from the income property – which is obviously something no real estate investor desires! Therefore, when you find an investment property for sale, conduct an investment property analysis to identify whether it’s a positive or negative cash flowing income property.
Good Return on Investment
In real estate investing, you can determine whether or not the return on investment is good using certain metrics. The cap rate and cash on cash return are the most popular metrics used by a real estate investor. To calculate the cap rate and cash on cash return on the investment property for sale, use the following formulas:
Cap Rate = Net Operating Income / Current Market Value
CoC Return = Annual NOI / Total Cash Invested
Related: Cap Rate vs. Cash on Cash Return
Expert property investors agree that, in terms of cap rate, anything above 10% makes a good return on investment. As for cash on cash return, some consider 8-12% as good, while others would only recommend investment properties that promise 20% of return on investment. On average, income properties must generate at least 15% ROI to be profitable.
To save time and effort while calculating these metrics, make use of Mashvisor’s Investment Property Calculator! To learn more about our product, click here.
You might purchase an investment property for sale that guarantees positive cash flow at the moment, but you should further think of how profitable this investment will be in the coming years. An income property with high appreciation is profitable because as its value increases, the real estate investor will make a profit when he/she decides to sell it later on in the future.
As a result, look for an investment property for sale in areas expecting major economic growth, where land is becoming limited, infrastructure development projects are being planned, and are major business hubs and tourist attractions – these factors ensure high appreciation.
How to Find the Best Investment Property for Sale
Ready to take advantage of the hot spring real estate market? Let us help you out! In order to find the best investment property for sale, property investors must perform a real estate market analysis and an investment property analysis.
The real estate market analysis allows a real estate investor to evaluate a certain market and income properties in that real estate market to find out whether or not it’ll make a good location for real estate investing. In addition, the investment property analysis allows property investors to assess and compare the targeted investment property for sale with other investment properties to determine its potential profitability before making a purchase.
Alternatively, Mashvisor’s platform provides property investors with the best real estate investing tools that eliminate the need for a real estate market and investment property analysis and help them make smart investment decisions. Mashvisor also provides property investors with traditional and predictive data analysis regarding traditional and Airbnb investment properties.
Click here to start looking for and analyzing the best income properties in your city and neighborhood of choice.
To start your search for an investment property for sale, make use of Mashvisor’s:
- Investment Property Finder: a digital tool used to find income properties taking into account property investors’ preferences and search criteria. For example, one real estate investor might be searching for a specific type of investment property for sale in a certain city or within a certain cap rate. Using filters, this real estate investing tool allows them to easily set their preferences and then provides them with a list of investment properties that match their criteria.
- Investment Property Calculator: A versatile tool that allows property investors to calculate the different values related to an investment property for sale, including the Cash on Cash Return, Cap Rate, Cash Flow, and Airbnb Occupancy Rate.
- Heat Map Function: The heat map function for the property finder tool allows a real estate investor to find investment properties much faster using visual cues! For example, you can set the heat map to indicate the areas with the highest Cash on Cash Return, and you will immediately be able to see the results.
Mashvisor’s real estate investing tools are user-friendly, easily accessible, and turn 3 months of search for an investment property for sale to just 15 minutes! Sign up with Mashvisor to get hold of these must-have real estate investing tools and start finding the best income properties in any state, city, and neighborhood across the US real estate market.
To sum up, spring is the best time of year to start searching for an investment property for sale in any real estate market. Smart property investors take advantage of this season, and so should a beginner real estate investor. Be smart and start your 14-day free trial with Mashvisor. To subscribe to our services with a 20% discount after, click here!