Real estate investing can be a very lucrative career, especially if you buy the best investment property. But, with the millions of listings and different types of investment properties that the real estate market offers, a beginner real estate investor will worry about conducting a successful property search. As a result, many turn to real estate agents as professionals who are experienced in the market. However, what if we told you that performing a real estate property search is actually not as hard as you would expect?
In this article, we break down the steps to performing an investment property search. In addition, we provide you with helpful tips on how to find the best investment properties without the help of real estate agents. So, without further ado, let’s jump right in!
First Step of a Property Search is to Perform a Real Estate Market Analysis
Conducting a real estate market analysis is the process of evaluating the real estate investment to explore its expected profits and risks. A real estate market analysis is essential in the property search process because it provides a real estate investor with a comprehensive picture of the location of the subject income property and the larger economy to determine whether or not a certain location is profitable for real estate investing.
After all, a smart real estate investor knows that location is key to a successful real estate investing career. The location of the income property affects everything related to it from the purchase price, rental income, operation expenses, and overall profitability. This is why it’s important for property investors to look for the best real estate market during their property search. To do so, they need to perform a real estate market analysis. In general, the best markets for real estate investing have the following features:
- Growing population
- Strong job market
- Healthy economy
- High rental income
- Reasonable property taxes and insurance
When conducting a property search, make sure you find these features in your real estate market of choice. If your local market lacks these factors, it’s best to perform a property search in a different city or even out-of-state. A real estate market analysis will provide you with the best locations and real estate markets to buy a rental property.
Second Step of a Property Search is to Perform a Neighborhood Analysis
Say you’ve found a real estate market in which buying an investment property will be profitable. The next step in a property search after a real estate market analysis is performing a neighborhood analysis. Even if a certain real estate market is booming, some of its neighborhoods could still yield a negative cash flow while others generate a positive cash flow. Thus, income property investors conduct a neighborhood analysis to:
- Determine the average performance of investment properties in a certain neighborhood
- Identify the best investment properties that have the highest projected returns
- Understand market trends to get a better idea of where the market is headed and what it will look like in the future.
As you can see, a neighborhood analysis is a very important step in performing a successful investment property search. When doing a neighborhood analysis, real estate investors narrow down their property search and filter out investment properties that do not meet their investment criteria.
For example, one real estate investor might only be interested in buying a single-family home with 2-3 bedrooms and within the price range of $100,000 – $150,000. Another real estate investor might be more interested in buying an investment property with a certain cap rate, cash on cash return, and rental income. With a neighborhood analysis, property investors can use these metrics during a real estate property search to find the best rental property with a good return on investment.
Moreover, a neighborhood analysis also helps real estate investors in choosing the optimal rental strategy. Some neighborhoods yield a higher return on investment for Airbnb rentals and others for traditional rentals. With a neighborhood analysis, property investors can find the best investment properties to match their rental strategy.
Third Step of a Property Search is to Perform a Real Estate Investment Property Analysis
Assume you’ve found a good neighborhood in a certain real estate market. It’s not a smart move to buy the first rental property that comes your way or the cheapest one in that neighborhood. Therefore, to complete their property search, real estate investors have to perform an investment property analysis before buying a certain income property.
In real estate investing, investment property analysis is the process of analyzing a potential real estate investment property by calculating different values related to its profitability. This includes analyzing the cap rate, cash on cash return, rental income, and the occupancy rate of the income property. This helps income property investors determine the property’s viability for investing and its overall profitability.
Thus, real estate investors need to perform an investment property analysis for multiple properties in a certain neighborhood during a property search. This allows them to find the best rental property that generates a positive cash flow and provides a high return on investment in that neighborhood. However, keep in mind that this will depend on your investment strategy, the type of real estate property that you’re investing in, and your personal investment and financial goals.
Mashvisor offers real estate investors readily calculated cap rates, cash on cash returns, rental income, and occupancy rates of investment properties that are currently listed in the US housing market. With our data, your investment property analysis will only take a few minutes to finish instead of spending months on research!
To start analyzing the best investment properties in your city and neighborhood of choice, click here.
Helpful Tips to Consider During a Real Estate Property Search
Use a Rental Property Calculator
Seeing as a real estate investor will have to conduct many analyses during an investment property search, how can he/she do them in a quick way that also ensures getting accurate results? The answer is with the help of a rental property calculator.
This real estate investing tool does almost everything from showing you which real estate market is the best for buying an income property, through performing a neighborhood analysis, to estimating the different values for cash on cash return, cap rate, rental income, and the occupancy rate of investment properties!
Mashvisor’s rental property calculator will be your best friend during your real estate property search. It is a user-friendly and easily accessible online tool that allows you to calculate the above-mentioned values related to both traditional and Airbnb investment properties. Mashvisor turns 3 months of property search into just 15 minutes!
Use an Investment Property Finder Tool
This is a digital tool used to find investment properties taking into account property investors’ preferences and search criteria. For instance, a real estate investor might be performing a property search for a specific type of income property within a certain cap rate. This real estate investing tool allows you to set your preferences and then provides you with a list of investment properties that match these criteria. As you can tell, this is especially helpful when performing a neighborhood analysis.
Mashvisor’s investment property finder makes use of a wide range of data comps, analytics, and metrics to offer lists of investment properties across the US housing market with the highest potential for profits. Mashvisor also uses the heat map function which allows you to find investment properties much faster and using nothing but visual cues. Real estate property search can’t get any easier than this!
To find the best investment properties in your city and neighborhood of choice using Mashvisor’s investment property finder, click here.
Final Words on Performing a Real Estate Property Search
You don’t need real estate agents to perform a property search. This process might be overwhelming for beginner real estate investors, however, following the above-mentioned steps and using the right real estate investing tools will make it much easier and more effective!
Mashvisor empowers property investors throughout their real estate investing careers and helps them make the best investment decisions. Sign up with Mashvisor to get hold of our real estate investing tools to help you throughout your property search.
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.