How to Find the Best Investment Properties

investment properties

Interested in investing in the real estate market but don’t know where to find the best investment properties?  There are several keys to locating the best investment properties to ensure that your money will have high returns and be a secure investment for either a short-term house flip or for long term investment in buy to let.

Locating the Best Investment Properties

Your first stop is where to find these properties.  Its likely you’ll get the best deal if you can buy away from the core market.  If a property has just been listed and has appeared on all the online property listing sites then let’s face it you’re going to pay a premium for this as you will have plenty of competition.  But if you use an investment property location service, go to an auction, look out for properties being sold by owners, or look at listed properties that have been on the market for a long time, then you should get a good deal.  Let’s face it, getting $10,000 knocked off the asking price at the beginning could make all the difference to your profit when you come to sell it.

Picking the Right Type of Property

Next step is deciding if it’s the right type of property.  The best margins are made on properties that need the most work.  If you can take an old run-down property, bought at the right price, and bring it up to modern standards then you should make a healthy profit margin.  Buy the worst house on the best street in town, that’s the best house to invest in.  Around 10% of houses bought each year are flipped so buyers aren’t surprised to find houses on the market that have been bought, renovated and resold within a short period, they are often willing to pay a premium for them because the work has been done for them, they can move right in.

Look out especially for areas where there are a lot of very desirable older larger homes that will need love and attention, and not very many new housing developments.  Once your renovated property hits the market it will be in high demand.

Choosing the Best Rental Property

If you plan is to buy and then rent out a property, then some of the same rules apply.  You want to be able to add value to the property, buy cheap, rent high.  So look at the potential rental yield on a property by comparing what other local properties rent at.  According to many of the real estate investment advisors the best rental bracket is within 25% of the average rental paid.  So if average monthly rental in your area is $1000 then buy a property that will rent between $1000 and $1250.  Why?  Because there will always be high demand for this property no matter what happens with the economic system. 

Look for an area which has a long history of upward trend on rental income too as this will guarantee long term returns.