The Short Answer
When it comes to real estate investing, one of the first steps in the process is learning how to find investment property options. This is a key aspect of real estate investing, as the choice of investment property can lead to the deal becoming a great success or a major loss. A property search includes the location and property type, as well as property features and more.
When learning how to find investment property deals, keep in mind your real estate investing goals and whether the property will help you reach your goals. The top 3 ways to find investment properties are:
- Real estate websites and MLS: Both of these sources provide investors with comprehensive databases for their property search and are powerful tools for investors to use when learning how to find investment property deals. Websites like Zillow, Realtor.com, Trulia, and Redfin can be used to find real estate properties, along with the trusty MLS.
- Networking and real estate clubs: Connecting with other real estate professionals, investors and real estate agents is a good way to build relationships that can lead to finding off market properties and deals that aren’t available through traditional channels.
- Direct marketing and wholesalers: Using direct marketing techniques, such as letters, to express interest in buying a property, can lead to beating the competition to off market deals. Also, real estate wholesalers can provide access to a steady stream of distressed real estate properties and off market opportunities.
Key Topics
12 Ways To Find Investment Properties For Sale
The key aspect of real estate investing is finding the right investment property. Finding the right investment property requires research, due diligence, and patience. Analyzing an investment property’s potential for rental income or resale and considering the neighborhood’s growth potential and market value before making any investment decisions is vital.
Working with experienced real estate professionals can also help you navigate the real estate market and find the best investment opportunities. Here are 12 ways to find investment real estate properties for sale:
1. Real Estate Websites
Real estate websites like Zillow, Trulia, Redfin and LoopNet are a go-to resource for various real estate investing needs. This is because they have vast databases of real estate properties for sale, which include investment properties. Investors can easily search on these websites for an investment property, such as a fix and flip or rental property, based on location, price range, property type, and other criteria. They can also set up alerts according to their investment criteria, so that new listings are sent directly to them.
For investors who want to see detailed investment property descriptions, photos, virtual tours, and neighborhood information, these websites can help with a lot of the preliminary research that needs to be done on investment properties. The best part is that this can all be done from anywhere, with the click of a few buttons.
2. Multiple Listing Service (MLS)
The MLS provides a comprehensive database of listings used by real estate agents to list properties for sale. Gaining access to this service is a great way to get access to a broad selection of investment properties. Investors can collaborate with a local real estate agent to gain access to the MLS and the real estate agent’s network.
The MLS provides real estate professionals with access to a very large database, which creates the opportunity to find investment properties that align with an investor’s goals. The platform allows investors to search via location, and there is a separate section for foreclosure properties, which is useful for investors who are looking for great real estate deals.
3. Real Estate Auctions
Real estate auctions offer investors the chance to get access to discounted properties and potential bargains. There are different types of auctions that can be attended, including foreclosure auctions, auctions where repossessed properties are sold by lenders, tax lien sales, or auctions where properties with unpaid taxes are sold.
Auctions typically involve homes being sold at significant discounts, but investors should also be aware of the risks. These risks involve properties that are sold “as is”, which means that investors need to do significant due diligence, to make sure that the property is a good investment.
Investors can use websites like Auction.com to find foreclosures, REOs, short sales, commercial real estate, luxury real estate, new construction, and land. It’s also important to note that successful bids will need to pay for the property upfront, so investors will need capital available, when going down this route.
4. Real Estate Investment Clubs & Networking Events
Joining local real estate investment clubs and attending networking events opens the doors to valuable connections and opportunities. These clubs and events are a good way for real estate professionals, investors and property sellers to connect. Networking gives investors the chance to gain valuable insights, share experiences, and discover off-market deals that may not be available through traditional channels.
Investment clubs can provide a gateway for investors to learn more from expert speakers and educational sessions and find out about the latest real estate market news and investing strategies. They also allow investors to build a strong support network, and potentially find partners for joint ventures and other investing opportunities.
5. Wholesalers
Real estate wholesalers act as intermediaries between buyers and sellers, by finding good investment property deals, negotiating deals and then selling these properties to investors at higher prices. Wholesalers aim to find distressed properties to sell to other investors and make a profit from the wholesale fee that they charge.
Wholesalers will typically focus on off-market deals, which means properties are not yet listed on any main channels. Investors who are looking for good investment property deals should consider working with wholesalers, as this can give them access to off-market deals that they wouldn’t have been able to access on traditional channels necessarily.
It’s important to bear in mind that wholesalers all charge a fee, which can vary, depending on the person, and ensuring transparency on the condition of the property is key, before making a purchase.
6. Direct Mail & Cold Calling
While direct mail and cold calling are more intensive strategies that require effort and energy. Direct mail involves sending communications directly to a property seller to express a purchase intent. Cold calling involves making contact with a seller via a phone call, to present an offer or discuss purchasing the property.
These methods can be effective, however they require perseverance and following up with people, sometimes multiple times. Motivated sellers are more likely to respond to investors who are contacting them personally. However, sellers may not be receptive to this outreach, so investors should be sensitive to this and act accordingly.
7. Bank-owned Properties
Banks often have a portfolio of foreclosed properties, also known as Real Estate Owned (REO) properties. These properties have been repossessed by the bank, because the owner could no longer pay their debt. As such, the bank simply wants to sell the property quickly, so that they can recover their losses and minimize any holding costs.
Bank-owned properties can therefore provide excellent opportunities for real estate investors as they are often priced competitively, so that the bank can sell them fast. Investors can find these properties on bank websites, or lender websites. There are also real estate agents who specialize in foreclosure properties, who can provide investors with a range of REO properties to choose from.
8. Social Media & Online Forums
Social media has many uses, and one of the most useful for real estate investors is investment groups and communities on the likes of Facebook. These and other online forums provide investors with the chance to connect with other real estate professionals, find sellers and potentially good investment property deals.
Engaging with the community and other investors, lenders, real estate agents and professionals in the industry can enhance credibility and lead to valuable connections being formed. These could lead to off-market deals and potential joint ventures.
Interacting on social media and online forums can be done easily, from the comfort of your own home. So, this is a worthwhile avenue to try, before you begin your journey. Being successful in real estate is often about getting yourself out there, and making the right connections, and social media offers an easy way to do this.
9. Driving for Dollars
The age-old driving for dollars strategy remains a tried and tested approach that can still yield results, when it comes to finding investment properties. It involves driving around an area that an investor would like to invest in and identifying potential opportunities. Typically, investors look for distressed or abandoned properties, which may indicate motivated sellers or properties with untapped potential.
The most successful way to do this is to create a list of target neighborhoods based on your investing criteria. Then drive through these neighborhoods and look for properties that are in poor condition or neglected. The next step is to gather information about these properties and find out if the owners are willing to sell them. This can be a successful way to find distressed properties and purchase them, before they are listed or snatched up by any other investors.
10. Public Records
Checking county or city records is a good way to gain access to potential investment opportunities. These records will show properties that are facing foreclosure, tax liens, or other financial distress. Which means that they will likely be available at discounted prices, which offers fix and flip investors particularly good investment opportunities.
Investors can access these records by visiting the local courthouse or checking online databases that are maintained by government agencies. This method is more time consuming as it requires detailed research, sifting through many properties, and verification of information. However, the payoff is that it can lead to finding great investment property deals, with no competition from other investors yet.
11. Real Estate Crowdfunding Platforms
Crowdfunding has become a popular way to raise funds for a variety of purposes, not least of which includes real estate deals. Investors can pool their funds and purchase larger properties that they wouldn’t have been able to gain access to otherwise. Real estate crowdfunding platforms provide access to a diverse range of investment opportunities, from residential to commercial real estate, with varying levels of required investment.
Real estate crowdfunding allows investors the opportunity to diversify their portfolios without needing a large amount of capital. Investors can diversify into different markets and property types or real estate investments (such as commercial rental properties and residential fix and flips), which allows them to spread the risk and tap into new areas within the industry.
Investors should carefully research each crowdfunding platform, before choosing one to try. They should also take a detailed look at each real estate deal, and the experience and track record of each sponsor. Platforms such as Crowdstreet, Fundrise and Diversyfund are some of the most popular platforms for investors to use to find investment properties.
12. Property Management Companies
Property management companies can be a valuable resource for investors as they often handle distressed or vacant properties, as well as rental properties. These properties are sometimes for sale, which means that investors can purchase them and fix them up, before re-selling them, or renting them out. Property management companies also manage rental properties for absent or out-of-state owners.
Investors can reach out to local property management companies and ask them about any properties that they currently have for sale or those they anticipate listing soon. Establishing a good relationship with these companies can provide access to off-market deals and potential leads for a rental property or fix and flip investment.
How To Find Off Market Investment Properties
One of the best ways for real estate investors to beat the competition and find great real estate deals first is to locate off market investment properties. Off market properties or off market listings are properties that are for sale, but are not listed on any public platforms, such as the MLS. Thus, these properties are not likely to be found on any traditional real estate channels, and are not marketed to the public actively, which makes them “off market”.
Finding off market properties can be challenging, but they present unique opportunities for investors to find the likes of fix and flip or rental properties with little to no competition. Off market properties also allow for investors to negotiate the terms of the real estate deal with the seller directly. However, investors should make sure to do due diligence and verify the property details before proceeding with any transactions.
Here are 5 ways to find off market investment properties:
- Networking: Making connections with other real estate professionals is one of the best ways to find off market investment properties. These connections can help investors to find properties that aren’t publicly listed yet, or they may know the owners directly.
- Direct Mail: As mentioned above, direct mail marketing involves sending property owners direct communications such as letters. Investors can target certain areas and property types with these communications, and suggest their intent to purchase, as the property may not be available to the public yet.
- Driving for Dollars: Driving around a target area and finding properties that look abandoned or neglected is a good way to find investment opportunities that aren’t officially on the market yet.
- Real Estate Agents: A local real estate agent can be a useful resource for investors who are looking to find off market properties, as these agents will know the area well and may have contacts for these deals.
- Online databases: There are various online databases that have information on off market properties. They may require a fee, however this can be a worthwhile investment when it comes to finding properties before the competition.
For those who are investing in off market properties and looking to get a property below market value, the risks associated with this investing strategy can be mitigated by:
- Clearly defining your investment criteria, which includes your budget, property type, ideal location and optimal ROI. This will help you to know exactly what you’re looking for and be able to quickly assess whether real estate deals fit in with your goals.
- Researching the local market trends, in order to understand property values, rental demand and other economic factors that could impact your off market property investment, particularly a rental property.
- Being patient with your search, because it may take longer than you expect but regularly following up with sellers can pay off in the long run.
- Looking for motivated sellers, as they’re more likely to be convinced to sell to you and offer a discount on the price of the property.
Mistakes To Avoid When Buying Investment Properties
Investment properties, such as a rental property or fix and flip, provide a great opportunity, but they also come with risks and common mistakes that are made. These can be avoided and mitigated, so that real estate deals become profitable. For those who are looking to find investment properties, here are some of the most common mistakes to avoid:
Skipping due diligence: Due diligence is a vital step in any deal, but particularly when it comes to real estate investing. Investors need to conduct thorough due diligence on each investment property, be it a rental property or fix and flip. This includes the property condition, title search, potential rental income, expenses, zoning issues, legal problems and more. Even when competition is tough, due diligence should not be skipped or this can lead to costly surprises later on.
Overleveraging: Leverage can be a very useful tool when it comes to purchasing an investment property, such as a rental property, but a common mistake among investors is overleveraging themselves by taking on too much debt. This debt can leave investors at the mercy of fluctuations in the economy like interest rate changes. To protect the investment, it’s best to have a balance between debt and cash reserves, so that the investment property doesn’t fall into a negative financial space.
Underestimating expenses: It’s important to accurately estimate the property’s expenses, wherever possible. Underestimating these expenses can lead to unexpected costs and leave investors in hot water financially. Property expenses go beyond maintenance and repairs, they also include property taxes, insurance, and for rental properties, both property management fees and potential vacancies. These expenses, including the property taxes, are applicable for a rental property, fix and flip project and other investment types.
Hidden costs: Additional costs associated with an investment property can sneak up on investors and set them back financially. Be aware of hidden costs that come with properties, such as homeowner association fees and special assessments. Investors should also pay attention to upcoming changes in local regulations that could impact the property’s value or appeal, which is a common oversight among inexperienced real estate investors.
Final Tips For Buying The Perfect Investment Property
By being diligent, well-informed, and strategic in your approach to finding investment properties, such as a rental property, real estate investors can minimize the risks associated with these purchases, and position themselves for a successful and rewarding investment experience.
Investing in off market properties, for real estate investors, can be a successful strategy to beat the competition and find property deals that haven’t reached the public yet. Using the methods we’ve mentioned above, real estate investors can get access to properties that aren’t listed yet and get great deals from motivated sellers, then increase the market value and make a profit.
Being proactive and patient in your property search can lead to successful results, provided that real estate thorough research is conducted and informed decisions are made about investment properties in the real estate market.