Buying an investment property can be one of your wisest financial decisions. Over time, property owners can realize significant appreciation and steady cash flow through passive income if they choose the right properties.
But how do you find investment properties for sale? When done correctly, finding and choosing the right property type for you can be time-consuming. But it doesn’t have to be. Here are some places you can start exploring today to get into the real estate market.
What you need to know before searching for investment properties
Spending hours scrolling through listings websites and dreaming about properties can be fun. But if you’re looking to buy, you can do so more efficiently if you know what you’re looking for. We’ve put together a guide to real estate investing that can help you clarify your short- and long-term goals.
Here are some other things to consider before you set off on your search so you can make the process as efficient as possible.
Calculate how much of an investment you want to make
Be realistic: how much can you afford to put down for a down payment, and how much can you afford to pay for a mortgage? Don’t forget to factor property taxes, closing costs, and homeowners insurance into that total cost. Sites like Zillow can help prospective homebuyers estimate mortgage payments and additional monthly and annual expenses based on the expected purchase price, market value, estimated interest rates from lenders, and historical data about each property, such as property taxes and homeowners association (HOA) fees.
Decide what kind of real estate investment property you want to buy
Before you look for a property, you should know what you’re looking for and what your goal is. Do you want to enter the housing rental market, or are you more interested in developing land for commercial use? Are you looking for a long-term investment or a relatively quick cash return, as you might find from flipping houses?
Think about the best real estate investment for you, so you can search listings more effectively and weed out properties that won’t work for you.
Know where you want to buy
Before you start getting too deep into the search process, research prospective property markets that interest you and understand what you want to get out of the investment. Maybe you’re a first-time investor, and you’ve only just started thinking about this because you’ve seen a great deal right in your neighborhood and are in a housing market you trust to continue growing. While that first “for sale” sign might not be the perfect option for you, you can use that as a starting point to research home prices and historical property values in your area and decide whether it’s the right place for you to invest.
Or, maybe you’ve been reading a lot in the news about a specific market elsewhere in the country, and you’ve decided you want to invest there. You can then narrow your search criteria to that town and review options throughout the area, including options from crowdfunding platforms like Arrived, which enable you to realize gains from an investment property without having to front all the money for a down payment by yourself.
Make a plan to get the highest return on investment—and time
Knowing how you want to use a property can help you sift through options and rule out properties that won’t achieve those goals. For example, suppose you’re looking to capitalize on travel trends to get regular cash flow from a vacation rental. In that case, your timeline will look quite different if you’re buying a recently renovated house versus one that needs a lot of renovations. Many cities and towns have restrictions on how short-term rental properties can be used, so if you know you want to put a house on Airbnb, you can research those laws and see whether licensing fees and lodging taxes will eat up a significant portion of your gains.
If you’re considering buying a single-family house, consider the potential monthly rental income and whether it would balance out your mortgage. If you’re aiming for a multifamily home, think about whether you would want to live there yourself. Generally, you will have much lower taxes if you’re living in an owner-occupied multifamily house than if you live elsewhere and rent out every single unit. Also, know whether you’ll want to manage tenants yourself or if you’ll want to engage a property management company to find renters and deal with maintenance issues. While such companies can take a lot of the hassle out of owning a rental property, they can also cost a lot of money.
Types of Places to Search for Investment Properties
Regardless of where you live, you can generally invest in real estate properties virtually anywhere. And lucky for you, there are scores of ways for prospective buyers like you to find a good investment even without first traveling to the place you’re looking to invest.
Once you’ve made a budget, crafted a plan for the type of property you want to buy, and gained clarity on how you expect to realize ROI, you can start seriously looking for properties that make sense for your grand plans.
Here’s where you can start your search for real estate investment properties.
Real Estate Listings
Sites like Zillow, Trulia, Redfin, Realtor.com, and others collect listings from all over the country to help prospective homeowners and real estate investors find what they’re looking for. While these sites mainly list residential properties—single-family homes and multifamily houses that may provide good rental income—you can also find other types of property through them, including undeveloped land.
Real estate investment crowdfunding platforms
One of the easiest ways to find investment properties with little administrative work on your part is to invest through a crowdfunding platform. Arrived, for example, collects investments of all sizes from investors to fund properties with high potential for long-term rental income and appreciation. The properties listed are all available for immediate investment, and you can invest with virtually any dollar amount you’re comfortable with, whether that’s a few hundred or tens of thousands.
Fractional ownership enables you to find and invest in properties expected to start appreciating and generating rental income immediately. It takes all the admin work out of it for individual investors. Arrived’s team handles all necessary repairs, maintenance, and tenant relations—all you have to do is make your investment.
Auctions
When homeowners default on their mortgages and the property enters foreclosure, the lender generally sells the property at auction to the highest bidder. Legally, the lender is not allowed to profit from the sale, so any proceeds after the bank recoup its costs and cover any liens will go back to the homeowner.
Generally speaking, you will not have access to the property before buying it, and you may not even be able to see good pictures of the interior of the home. So, while such sales can often look like outstanding deals, there may be a lot of hidden work that needs to go into the house.
You can find auction listings on Zillow and similar sites and auction-specific listings sites like auction.com and Hubzu.
Real estate agents
You can often find what you’re looking for more quickly by working with a trained professional who can help you clarify what you want and then bring personalized options straight to you. Aside from having access to professional listings tools, agents and brokers can also have a wealth of information about the property market, rental trends, and inventory coming on the market soon. So, if you get lucky and find the right agent in the right place at the right time, they can send exciting new opportunities directly to you the minute they hit the market.
You can find real estate agents through local property dealers, online listings that will connect you with an agent for viewings (such as by scheduling a viewing through Zillow), or through word of mouth. Ask around if you know anyone who has recently bought or sold an investment property to see if they would recommend the person they worked with.
Classified ads and ‘For Sale‘ signs
We all know Craigslist as the place to find new roommates and list stuff we don’t want. To be sure, there’s a lot of junk on there, but you might also find a gem of a listing for a home for sale by owner. You might find similar listings in local newspapers or town or city forums.
You can also get lucky by driving through the neighborhood where you’re interested in investing. Particularly if someone is trying to sell a home on their own without the help of a real estate professional, they’re likely to post up signs in front of their house and potentially even around the neighborhood, such as on bulletin boards at cafes or in community centers.
Wholesalers
Wholesalers work with property owners to find buyers for their homes. They do this by contracting rights to purchase the property and then profiting by selling the house for a higher purchase price to the end user. Wholesalers list their contracted properties and look for buyers in many different ways. Websites including myhousedeals.com can help you find undervalued properties with high profit and investment potential.
Start investing in real estate today
Finding the best real estate investment for you can be challenging if you’re trying to figure everything out on your own. While there is no shortage of opportunities, each comes with its own risks.
Investing through Arrived can minimize the unknowns and the hassle of finding and managing properties. Browse available investment homes today and see how your initial investment could grow over the next few years.
