How to Scout Real Estate for Investment

Ever since the crash of 2008, many people have been wary of investing in real estate.

The truth, though, is that real estate can be a great investment that yields significant returns. This is especially true if you choose to invest in the right properties.

Whether you want to be a casual real estate investor or make it your full-time gig, it pays to know how to choose the right properties to purchase.

Read on to some tips that will help you scout real estate and find the very best investment properties.

Choosing the Best Investment Properties

There are a lot of factors you need to take into account when it comes to choosing an investment property. The following are some of the most important things you need to consider when you start scouting out properties:

Population Growth

One of the first things you’ll want to get more info on when you’re considering a particular property is the population growth in the area.

Are lots of people moving to a particular neighborhood or city? If so, it’s going to be easier for you to find tenants or buyers for the property.

Job Trends

Think about job trends and job growth in the area, too.

Are there plenty of job opportunities? What’s the unemployment rate like? What’s the average salary like?

The better things are work-wise for people in an area, the better a place it is for you to purchase an investment property.

Economic Diversity

Economic diversity is essential when it comes to choosing a good location for an investment property.

Ideally, the economy will be driven by several different industries. If everyone in the area relies on jobs within one industry, there’s more of a risk than if there are lots of different opportunities for people to make money.

Vacancy Rates

Consider vacancy rates in the area as well. Are there lots of houses on the market and vacant commercial properties? If so, this is a bad sign, especially if these properties have been on the market for a long time.

Property Regulations

Regulations and taxes in a particular area can make it a less-than-ideal place to purchase an investment property. In most cases, you’re better off investing in properties in places that have low property taxes and less stringent landlord-tenant laws.

Schools

It’s a good idea to consider the schools in an area before you buy an investment property there. People love to live in areas that have good schools, and they’re willing to pay more money to do so.

Whether you’re planning to rent out your property or fix it and flip it, the strength of the school district will have a big impact on the amount of money that ends up in your pocket.

Crime Rates

Crime rates matter, too. Nobody wants to live in an area that’s known for being unsafe.

If you want to be able to sell your property quickly or get higher monthly rent for it, it ought to be in an area with low crimes rates.

Amenities

Think about the amenities available to residents in a particular area, too. For example, is the property located close to shopping centers, parks, gyms, and public transportation?

All of these are selling points that can help you get more out of the property.

Average Rent

What does the average landlord charge renters in the area? Find out how much most landlords are taking home before you decide to buy a property to rent out in the same area. This will help you make sure it’s worth it for you to invest in a particular property.

Natural Disasters

Consider the climate in an area as well. Is it prone to natural disasters like hurricanes or tornados?

If so, you may end up having to pay more for insurance, which will eat into your bottom line.

Bonus Tips for Real Estate Investors

Clearly, there’s a lot to keep in mind. If you remember to consider all these factors, though, you’ll be more likely to end up with a great property that yields high returns.

If you’re brand new to the real estate investment game, you might have more questions about the process. Here are some other things you ought to know before you move forward with purchasing a particular property:

You’ll Need a Big Downpayment

When you’re purchasing an investment property, you won’t be eligible for mortgage insurance. As a result, you’ll need to put down a larger downpayment in order to finance it.

Remember, too, that loan costs are often higher for investment properties than traditional properties. Make sure you have enough set aside to cover these costs.

Be Wary of Fixer Uppers

Some real estate investors dream of making tons of money by fixing and flipping houses.

This can be a lucrative option for some investors. Remember, though, that a lot of money, time, and effort goes into fixing up houses, and the returns aren’t always what you’d expect.

Proceed with caution if you decide to take this route.

Start Small

It’s best to start with a small property when you’re a new property investor. Purchase a single-family home or a duplex instead of a whole apartment complex. This will help you get the hang of things and avoid feeling overwhelmed.

Choose the Right Partners

Finally, make sure you have the right people working with you as you begin your real estate investment journey.

A great real estate agent can help you find the best properties at the most affordable prices.

If you have any co-investors, make sure they’re people you trust who have the same long-term goals as you.

Time to Scout Real Estate

When you’re first getting into the real estate investing game, it’s easy to feel overwhelmed and confused about the best way to scout real estate and find the right properties.

If you follow these guidelines, though, the process will be less frustrating and you’ll have an easier time finding great properties that will yield the best returns on your investment.

Do you want to learn more about real estate investing? If so, be sure to check out some of the other real estate-focused articles on our site today.

Enjoy Plunged in Debt?

Pid

Subscribe to get our latest content by email.

Powered by ConvertKit

Speak Your Mind

*