Most newbie investors are perplexed by the question of how to find investment properties for sale. This page will focus on how to find a profitable real estate investment property. Finding the right investment property can be a daunting task, especially for beginners. With the market constantly evolving, it's important to stay up-to-date on the latest trends and techniques for finding profitable investment properties.
In 2023, investors need to keep an eye on the changing market conditions and identify the areas with high growth potential, higher rental yields, and low vacancy rates. This guide will provide practical tips and strategies for finding investment properties for sale, including distressed single-family homes, small apartment buildings, and fix-and-rent properties. Whether you're a seasoned investor or just getting started, this guide will help you navigate the real estate market and find the right investment property for your portfolio.
A good investment property often has very different characteristics than one’s dream home. For some, investment properties are those that are cheaper than average yet command average or above-average rents. This might be a “distressed single-family” home or a small apartment building. In other cases, the investment property is one in desperate need of repairs or renovations. You buy it for a low price, invest in repairs and strategic upgrades, and then sell the property.
Fix-and-rent is a hybrid of these two approaches, buying homes in need of repair, making the needed renovations and repairs, and then renting out your newly desirable rental property. You need to look for areas with high growth, higher rental yield, and low vacancy rates. You make the money when you rent it. The challenge for many is finding the right properties to buy.
Finding a good investment property can give you some great benefits such as:
- Income – You earn rental income by converting your investment property into a rental.
- Capital growth or Appreciation – As your property increases in value, you will benefit from a capital gain when you sell it.
- Tax deductions – You can deduct certain expenses relating to an investment property such as a rental. These expenses can be property tax, mortgage interest, property repairs, property insurance, etc.
- 1031 Exchange: You can take advantage of the 1031 tax-deferred exchange to acquire a more valuable investment property. You can find a “like-kind” but much more valuable investment property and exchange your old property to defer capital gains taxes on profits until that property is sold for cash.
Unlike some complex investments, you don't need any specialized knowledge to invest in real estate. You need to know where you are in the market cycle and find some good deals. Let’s learn about different options to find investment properties for sale in 2023.
How To Find Investment Properties For Sale By Searching Off-Market Deals
The best deals are those that haven’t hit the market yet. Once the property hits the MLS, you’re going to be in a bidding war with others considering buying the same property. In other cases, you’re trying to find homes before they go up for auction on the courthouse steps. The best way to find these properties is to network with realtors. Raise the cash to pay for these properties, because distressed sellers want to close on the deal as quickly as possible.
Then begin networking with realtors. Prove to them that you can afford to buy properties you want to buy because they don’t want to waste their time or that of their distressed sellers. Once they know you’re a serious buyer, discuss the types of properties you want to buy. You may begin to get leads on homes that are going to be sold to settle an estate or as part of an upcoming divorce.
You may learn about distressed sellers who will sell to you to avoid having a foreclosure on their credit reports. In summary, realtors are one of the best resources available to those seeking investment properties for sale. Cultivate relationships with several realtors so that you’ll have a steady stream of leads. Just make sure you give each of the businesses if you want them to continue working with you.
Find Investment Properties For Sale Through Multiple Listing Systems
Buying through the MLS is still the most common way people find real estate or investment property for sale. Short for “Multiple Listing Service,” the MLS is the collection of most of the properties that all real estate agents are currently trying to sell on the market. When you search a site like realtor.com, you’ll be searching the MLS. This information is widely distributed for most eyes to see.
The problem with the MLS is that every potential buyer is searching there. It’s the largest database of properties for sale, so trying to find a good deal can be a bit difficult as you have to compete with other buyers by entering into bidding wars. Every buyer is represented by a real estate agent or broker on MLS.
Being the first one to submit a “verbal offer” on a deal can often help you get it under contract before others get to see it. Have your financing option ready before you submit an offer as most sellers want to see a pre-approval letter before accepting an offer. This can help you avoid competition, and bidding wars. Hiring a competent broker can help to close a deal as well as avoid paying far more than you should for an investment property.
Find Investment Property By Working With Real Estate Wholesalers
Wholesalers find properties, often distressed, and buy them at a bargain price. They then shop for buyers. Wholesalers may advertise that they buy houses from divorcing couples, estates that need to be settled, rentals where tenants won’t pay the rent, homes in need of dire repairs, and sellers who need to close as soon as possible.
These sellers get 50 to 80 percent of what the house is worth, but they get the cash they need to settle their financial affairs or just move on in life. In other cases, the wholesaler buys the contract for the home and then shops for a buyer. Wholesalers then sell the house to someone else. This may be to the general public, but these properties are regularly sold to investors.
Buying investment properties from wholesalers has several advantages. You don’t have to shop around for deals. You’re still free to assess the condition of the property and its relative price. They may have several investment properties for sale that you can choose from. And you don’t have to pay for the double closing if you’re going to fix and then rent out the property.
Another solution in this category is buying investment properties for sale from property developers in private investment groups. These investment properties for sale may be fixed and flipped, fix and rent out, or massive redevelopments of multi-family housing. Buying “fix and rent out” properties has the added benefit of giving you a property that already comes with known cash flow. Ironically, you might find realtors who do this type of property development on the side.
Find Investment Properties By Reaching Out to Potential Sellers Yourself
This can take several forms. One is driving for dollars or driving around looking for neglected properties. Note the address, and then send a letter offering to buy it. Another approach is direct mail to everyone in a given area. Send postcards letting everyone in the neighborhood know you buy distressed properties.
A few may contact you, and your information may be forwarded to someone they know who needs to sell fast. Direct mail only requires looking up public information regarding owner names and addresses. You don’t have to try to collect email addresses. You’re not cold-calling people in the area, something that could get you labeled a spammer.
What can you do if you’re interested in multi-family residential properties? Check the “for rent” ads. Are there developments that constantly have to advertise for new tenants? They may be willing to sell. Just make sure you have the plan to rehab the building and change how things are done.
For example, an apartment building owner ready to sell may be dealing with slow-paying tenants, high crime, or challenging government regulations. You may have to update the lease terms, evict non-paying tenants, make massive repairs, get government inspections, upgrade security features, or take more drastic action.
And you may not want to own a property in a dangerous neighborhood regardless of the ROI. On the other hand, you might find a real bargain when the soon-to-be-former landlady sells you the entire triplex so they can retire in Florida.
How To Find Investment Property For Sale Using Real Estate Websites
If you’re looking for investment properties, single-family homes can be found through traditional means like an MLS search as well as networking and direct marketing. Real estate investors looking for multi-family properties are rarely going to find this in the newspaper or the digital equivalent. Sellers of 50-unit apartment buildings and shopping malls aren’t going to list them on the average real estate listing site, either.
This is why you need to find websites like LoopNet, Realtor.com, and Costar that offer only commercial and multi-family residential properties. Sites like Zillow and Trulia rarely have such properties on their site. In some cases, you can find multi-family investment properties for sale by searching the offerings of various real estate investment groups.
People who buy, upgrade, and eventually sell multi-family properties are one of the few that will sell turnkey apartment buildings to renters. If you’re willing to take a risk and have excellent self-control, you might consider sites like Auction.com. This site focuses on housing auctions. This includes everything from land to newly built homes in foreclosure to luxury real estate subdivisions where the builder went bankrupt.
You can search their inventory for deals. You can look for properties you’re interested in. The challenge many would-be investors face is not over-bidding on the property. It is easy to get carried away when you’re trying to outbid others, though this could wipe out your profit margin.
How To Find Investment Properties For Sale By Talking to Bankers
An often overlooked way to find investment properties for sale is to talk to bankers. Let banks and credit unions know that you’re interested in buying foreclosed investment properties. You might be able to pick up newly renovated homes that house flippers couldn’t sell in time to avoid losing their shirts.
On the other hand, you might pick up a property that needs renovations completed to sell it or rent it out. In this case, bankers will be happy to give you first dibs because they know it will be hard to sell on the open market. You could also get leads on multi-family properties that are at risk of going into foreclosure.
Talking to bankers may lead you to bank-owned properties that haven’t been listed yet or were taken down off the website because they hadn’t sold yet. Better yet, they’re the ones who can give you lists of homes available for short sale. They’ll offer a discount because they didn’t have to pay the legal fees associated with the foreclosure. And almost none of the situations we’ve outlined will result in a property hitting the MLS.
Find Investment Property For Sale By Reviewing Publicly Available Information
This requires detailed research, but you may find leads for real deals. For example, reading lists of eviction notices published in the newspaper could tell you which apartment buildings have trouble with non-paying tenants. If the same property sees a steady stream of evictions, the owner may be eager to sell the property.
The same may be true of rented-out single-family homes. If you can find notice of default listings for multi-family buildings, you could make an offer before it goes into foreclosure. Sites like RealtyTrac are tailored toward searching existing foreclosures.
Another approach involves for sale by owner or FSBO ads. Owners trying to sell their own homes may be trying to save money. The property may need major repairs they can’t afford, or they may have an unusual home that’s hard to sell otherwise. In this case, you aren’t interested in the fresh listings. Instead, you’re interested in the FSBO listings that have been up for months. You already know from this that they are a distressed seller.
We would not recommend searching general real estate websites like Zillow to find FSBO properties, because it is hard to get a hold of the real owner instead of an agent working through Zillow hoping to act as an intermediary between you and the seller. However, you can use direct mail to reach everyone who has or has recently had FSBO ads to try to drum up leads.
One side benefit of this approach is that you can get very creative in the financing terms. This may include taking over someone else’s mortgage or signing a note with them to buy the property. However, we’d recommend getting a conventional mortgage to pay off their loan unless you’re going to sell the property in short order.
Always have a real estate attorney involved in this process. And have a thorough title search done every time because these kinds of investment properties for sale are much more likely to have clouded titles and issues like past-due liens. We do not recommend using tax liens as a way to get investment properties for sale.
There are many ways to find potential investment properties for sale, no matter what type of property you’d like to own. You can find a strategy that works for you, whether you have the time to do detailed research or want to be presented with several options to choose from.
Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in real estate and cash-flow investment properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property for sale.
Consult with one of the investment counselors who can help build you a custom portfolio of investment properties in some of the best real estate markets. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete real estate investments, we help you succeed by minimizing risk and maximizing profitability.