Real estate investments are preferred over other forms of investing by many Americans. The problem lies, though, in finding investment properties that generate monthly cash flow.
So, here are ten tips to find investment properties, which we use as a real estate wholesaler to find properties for our clients.
#1 Taxes and Fees
Property taxes vary significantly depending upon location. Also, some properties have fees, such as a CDD or HOA.
To avoid losing too much of your profit to taxes and fees, check with local governing bodies to understand all the costs.
At the same time, don’t let taxes and fees unnecessarily disqualify a property as an investment. Often times the most desirable properties have higher taxes and fees, which can result in longer-term and higher net worth tenants. As a result, you can actually generate higher profits with investment properties that have higher taxes and fees.
Neighborhoods are at the top of potential tenants’ list when searching for a home to rent.
Every aspect of the neighborhood is important to tenants, some of which we discuss below. Everything from the neighborhood’s reputation, to nearby local attractions, to traffic patterns are important to tenants.
It is important, therefore, to research the details of potential investment properties neighborhood by neighborhood.
#3 Crime Rate
Prospective tenants often check crime rates before deciding on which neighborhoods to live.
Not only do they not want to live in a high crime rate neighborhood, they often don’t want to live next to the neighborhood either. Therefore, it’s important for investors to research local crime rates that may affect their investment.
Local schools, and the overall school system, are important to most tenants.
Of course, parents with school age children want good schools for their children to attend. But, the sentiment can also carry over to tenants who do not have school age children, because everyone wants to live in a desirable neighborhood.
So even if you are leasing to retirees, it’s advisable to ensure that the overall school district is highly rated.
#5 Local Job Market
Economic growth boosts real estate investments, and the local job market is a reflection of economic growth.
Residents need a thriving job market to work and live in a community, and workers often like living near their place of work because of the quality of life when compared to making long commutes.
So when searching for places to buy investment property, look for cities with a hot job market, a growing economy, and a growing hosing market.
#6 Average Rents
Even if you own a rental property that has the best physical structure and outstanding curb appeal, it has to be reasonably priced. It can’t be priced 50% over the high end of average rents.
So before buying an investment property, research average rents to make sure the property can generate monthly cash flow, and you are not buying an overbuilt property for the area.
One of the best ways to make an investment property more attractive to prospective tenants is by having awesome amenities and nearby attractions.
Look for investment property in neighborhoods that have a pool, clubhouse, tennis courts, etc. And search the surrounding area for highly rated attractions such as parks, movie theaters, malls, and more.
#8 Future Development and Building Permits
Future development for an area can be positive or negative, depending on what is being developed.
Consult the municipal planning department to learn about future developments to determine whether the area is up and coming, and is a place future tenants will want to live.
Are schools being built, sports teams thriving and moving to the area, and cultural organizations building new facilities? Are roads being built and maintained? Is there a civic auditorium and is it hosting numerous events?
#9 Listing and Vacancy Statistics
To learn whether people are flocking to an area or fleeing, investigate listing and vacancy stats.
Reviewing listing and vacancy stats can tell you whether a neighborhood has turned down and people are leaving the area, or if people want to live in the area and rarely sell their homes. They can also tell you whether other investors are having problems keeping tenants, or if their tenants stay longer than average.
As an investor, you want to buy investment properties in desirable areas that will be easier to lease, and where high quality tenants stay longer.
#10 Frequency of Natural Disasters
No one can predict the weather and climate patterns, but there are certain locations that historically have natural disasters more often than others. Additionally, there are some locations that suffer greater devastation when there is a natural disaster.
For example, some areas are more prone to flooding because they are below sea level, and present higher risks for investors.
Whether you invest in high risk areas is a matter of choice, but at the very least take this into consideration when purchasing and leasing investment property.
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group wholesaling properties in the Greater Tampa Bay market since 2005.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.