If you’re new to the world of real estate investment, it can be tough to know where to start. There are so many different properties on the market today, and it can be difficult to determine which ones are the best fit for your needs and goals.
In this article, we’ll provide some tips for finding the best investment properties for sale. Read on to learn more!
5 Things to Keep in Mind When Selecting Properties to Invest In
Not all real estate investment properties for sale are created equal. So, how do you find out which ones are worth your time and money? Here are some key factors to keep in mind.
1. Your Investment Goal
First of all, you have to establish which investment goal you’re trying to achieve. Are you looking for long-term capital appreciation? Or, are you more interested in generating immediate rental income?
Your investment goals will play a big role in determining which types of investment properties are the best fit for you. For example, if your goal is long-term capital appreciation, you’ll want to focus on properties that have the potential to appreciate significantly in value over time. On the other hand, if your goal is to generate immediate rental income, you’ll want to focus on properties that are located in desirable areas and that offer competitive rents.
You also have to think about which type of investor you want to be. Do you want to be hands-on with your investment? Or, do you want to generate passive income without the taxing responsibilities of owning and managing your property?
No matter what your investment goal may be, make sure that you keep it front and center when evaluating investment properties for sale. This will help you to make smart decisions that are aligned with what you want to achieve.
2. Type of Property to Invest In
Once you have set your goal, it will be easier to decide which types of investment properties are the best fit for your needs.
For example, if you’re looking for long-term capital appreciation potential, single-family homes and multifamily properties are typically good options. If you’re more interested in generating immediate rental income, on the other hand, then you can go for vacation rental properties. These can include investment condos for sale, as well as apartments, beach houses, and cabins, which are located in areas that see high volumes of tourists coming in and out.
You can also consider other types of commercial properties, such as triple net leases (NNNs). These properties are a perfect option if you want to generate passive income without the hassle of being a landlord.
No matter what type of investment property you’re looking for, make sure to do your research before buying it. This will help you to avoid any costly mistakes down the road.
3. Location of the Property
When it comes to real estate investment, location is everything. You’ll want to focus on properties that are located in desirable areas with strong future growth potential.
Some factors that you’ll want to consider when evaluating the location of investment properties include the following.
- Strength of the local economy
- Population and demographics of the area
- Quality of the schools in the district
- Crime rate in the neighborhood
- Proximity to amenities and public transportation
Apart from these things, you should also keep an eye on local zoning regulations. These can have a big impact on your investment, so you’ll want to make sure that you understand what’s allowed in the area before making any purchase.
4. Cap Rate
This is a very important metric to assess, especially when you are buying an existing rental property. It is used to measure a property’s potential for investment return and can be very helpful in comparing different properties.
As a general rule of thumb, you’ll want to look for investment properties with high cap rates. This means that you can expect high returns, and you will have enough money to pay off your mortgage and other expenses that come with owning a rental property.
To calculate the cap rate, you’ll need to know two things: the property’s net operating income (NOI) and its purchase price. The NOI is the property’s rental income after expenses, and it can be calculated by subtracting the property’s operating expenses from its gross rental income.
Then, here’s the formula that you can use: Cap Rate = Net Operating Income / Purchase Price.
For example, let’s say that you’re looking at an investment property that has an NOI of $50,000 and a purchase price of $500,000. This would give you a cap rate of 0.10 or 10%.
Considering the ideal cap rate for rental properties ranging between 8% and 12%, this investment property would be a good option.
Keep in mind, however, that the cap rate is only one metric to consider when assessing investment properties for sale. You’ll also want to look at the cash flow, return on investment (ROI), and other factors before making any purchase decision.
5. Price of the Property
As a new investor, you would want to look for cheap investment properties for sale. This will help you to minimize your risks, as well as maximize your returns.
There are a few different ways that you can find affordable properties today. One option is to look for fixer-uppers that you can renovate and then sell or rent out for a profit afterward. Another option is to look for foreclosure homes that are being sold at a discount by the bank.
Of course, you’ll need to factor in the costs of repairs and renovations when assessing whether or not an investment property is truly cheap. You’ll also want to be mindful of the location and other factors that can impact the property’s value.
If you’re looking for the best investment properties for sale, make sure to keep these factors in mind. With a little bit of research and due diligence, you should be able to find great deals that fit your needs and goals.
Buying Your First Property: Steps to Take
Now that you have a factor checklist when choosing investment properties for sale, it is time to buy your first property. Here are the steps that you should take.
Step 1: Take Out a Mortgage Loan
Getting pre-approved for a mortgage loan will give you an idea of how much money you can borrow from the bank and what your monthly payments will be. It’s important to do this before you start looking at properties, as this will help to narrow down your options. You don’t want to fall in love with a property that’s outside of your budget!
You could also speak with your financial advisor to help you decide on the best financing options for your type of investment.
Step 2: Work with a Real Estate Agent
If you’re new to the world of real estate investing, it’s a good idea to work with an experienced agent, such as those you will find at Homes By Ardor. They can help you find investment properties that fit your needs and budget and provide you with guidance throughout the purchasing process.
During your meeting, all you need to do is tell them what type of property you are looking for and your budget for it. They will then be able to search their investment property listing and show you some investment properties that they believe match your requirements.
Step 3: Check the Properties and the Neighborhoods They Are In
When you’ve chosen a few investment properties that you’re interested in, it’s time to view them in person, along with your agent. Some of the most important things that you’ll want to check during your visit are the following.
- Condition of the property
- Features of the property
- The property’s history (e.g., how long it’s been on the market, any previous owners, etc.)
- Neighborhood quality (crime rate, access to good schools, availability of amenities, etc.)
- Current average rental prices in the area
These are just some of the things that you need to look at when evaluating a property to invest in. Depending on your investment criteria, there are still other things that you may want to consider as well.
Step 4: Make an Offer
Once you have chosen a certain property that you want to purchase, it’s time to make an offer. Your real estate agent should be able to help with negotiating a fair price with the seller.
If everything goes smoothly, then congratulations—you’re now a proud owner of investment property!
The Best Places in the US to Invest in Rental Properties
Whether you are buying a property to rent out on a long or short-term basis, there are cities and towns that are just better investment opportunities than others. You can choose the best area for rental property investing by starting your search in the following cities.
- Orlando, Florida
- Phoenix, Arizona
- Denver, Colorado
- Tampa, Florida
- Nashville, Tennessee
- Charlotte, North Carolina
- Atlanta, Georgia
Generally speaking, these places have the qualities of being located in a state with good weather, having a growing population, and offering many entertainment and job options. All of these factors make for happy tenants that are more likely to stay longer in your rental property, as well as recommend it to others.
However, these are just a few examples of good places to invest in rental properties. Of course, there are many other cities and towns that offer great opportunities as well. The key is to do your research and find an area that meets your requirements.
Take Your Time in Making a Decision
Investing in rental property is a big decision, but it can be a very rewarding one if you do it right. By following the tips above, you’ll be well on your way to finding the best investment properties for sale and making wise investment choices. And remember, take your time in making a decision—rushing into anything is never a good idea!
Did you find this article helpful? If so, be sure to check out our other blog posts for more great tips and advice on real estate investing.
Good luck!
