More and more people are investing in real estate to create an ongoing income stream and be financially free. However, when it comes to real estate investing, one of the most common concerns for beginners is how to perform an investment property search. Even some experienced real estate investors still find the search for properties to invest in quite challenging. With the numerous investment rental properties for sale in the market, how do investors find the best ones?
Finding a profitable investment property is not as easy as it may seem. Most investors rely on home listing sites and the MLS to find property for sale. However, not all houses for sale will offer good investment opportunities. To find an investment property with a good return on investment, you need to do a lot more. It is crucial for all real estate investors to learn how to find investment properties the right way before starting an investment property search. This blog will give you insight on the right steps to follow in your investment property search. Without further ado, let’s dive right in.
1. Find the Best Real Estate Market
The first step when looking for investment properties for sale is finding the best property market. As you might already know, location is the most important factor in an investment property search. This is because it influences the purchase price, rental income, expenses, occupancy rate, and overall return on investment of an investment property. Even if you have the best investment property but the location is poor, it will be difficult to make money.
When looking for the best property market in which to find an investment property for sale, you shouldn’t limit yourself to your local real estate market only. If your city is not profitable, it would be wise to consider performing an investment property search out of state.
To determine the best city, you need to perform a real estate market analysis. Check the state of the economy, job market, population growth, infrastructure, and crime rate. A simple Google search may give you some options for top real estate markets to consider. However, checking Mashvisor’s blog is the best way to find the top investment markets in the United States. Our blogs are up-to-date and contain state and city guides that will give you insight on where and why to invest in a particular location. Our location blogs include data such as the median property price, average rental income, average cap rate, average cash on cash return, and Airbnb occupancy rate from our Investment Property Calculator.
2. Find the Best Neighborhood
After locating a good real estate market, the next step for a successful investment property search is to find a profitable neighborhood. Even if the real estate market of a particular city is generally booming, some neighborhoods may still be unprofitable. Through a thorough neighborhood analysis, you can determine the best-performing neighborhood and the optimal rental strategy.
You can perform neighborhood analysis with Mashvisor’s Heatmap Tool. This tool uses different colors to distinguish the different neighborhoods in your US city of choice based on performance. The tool allows you to filter your search using metrics such as listing price, rental income, Airbnb occupancy rate, and cash on cash return.
Related: Real Estate Investment for Beginners: Neighborhood Analysis
3. Narrow Down Your Investment Options
So, you’ve found a neighborhood with good performance. The next step when searching for real estate is to narrow down your options based on your preferences and investment property search criteria. For instance, you may not be able to afford all profitable investment properties in the neighborhood. You may also have some personal preferences for the kind of investment property you want to purchase. It would be best to narrow down your options to only those that meet your criteria.
You can do this by using Mashvisor’s Property Finder Tool. With our Property Finder Tool, you can narrow down your options based on your budget, rental strategy, number of bedrooms, and number of bathrooms. You will get a list of rental properties for sale with the best overall ratings and good return on investment.
Related: How to Find Investment Properties Using a Property Finder Tool
4. Perform an Investment Property Analysis
The next step in your investment property search will be performing an investment property analysis. To make money in real estate, you need to ensure that your investment property will bring a good return on investment. Through this investment property analysis, you can find the best-performing investment property for sale in your neighborhood of choice.
To perform investment property analysis quickly and easily, be sure to use an investment property calculator. With Mashvisor’s Investment Property Calculator, you can estimate the values for rental income, occupancy rate, cap rate, cash on cash return, and investment costs for both Airbnb and traditional investment properties.
Related: How to Use Mashvisor’s Rental Property Calculator
5. Perform Comparative Market Analysis
You have chosen a profitable investment property. At this point, it is crucial to check if the listing price of that property is reasonable compared to other similar income properties in the same area that were recently sold. You can find real estate comps by doing a comparative market analysis. On your own, this exercise can be time-consuming. However, you can save yourself the trouble by using our rental property calculator.
The Bottom Line
Many beginner investors fail because they don’t know how to search for investment property the right way. Finding property with a good return on investment should be the goal of your investment property search. There are many property searching websites that you can use when looking for houses for sale online. However, to make your investment property search more effective and easier, you need the follow the right steps and use the right tools. Mashvisor is one of the best real estate sites for finding investment property that is profitable. Our investment property search tools are user-friendly, accurate, and fast. With them, you can search for residential investment properties in the US housing market with the highest potential for profits. Using our tools can drastically cut down the amount of time spent in the rental property search.
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