Ah, yes the $10,000 question, “where do you find great investment property?”
Often the best investments are found in the opposite direction of where most people look for them. The MLS (multiple listing service) is typically the first place people look to in order to find investment property.
While there may be a few choice locations throughout the country where you can actually find property on the MLS that can be bought for the purpose of renting for a profit, it is not a favorable tool for investment property purchases.
You want to think of the MLS as a tool where retail buyers are looking for property that retail sellers are selling. These typically are properties that people live in and sell to others who want to live in them. The very nature of the MLS is the homebuyer’s shopping center.
5 Ways to Find Great Investment Property
1. Property managers:
When talking with property managers, you are talking to people who interact with investment property owners every day. They will know when sellers of property that is already used as rental property comes available.
The nice thing here is these properties are already performing assets with tenants and property management in place. Unlike buying a property and guessing what rents and expenses will be, you will already have a track record of them.
2. Driving around areas:
When I am talking about driving around I mean cruising those areas that are representative of median home prices within an area. If the median home price is (let’s say) $100,000, then if you drive areas that have home prices of $80K to $120K, you are in areas that will be good rental properties.
3. Scoping out “for rents”:
Within these areas you often can see a property that has a for rent sign on it. Believe it or not, this may be a great time to approach the owner and see if they are interested in selling the property. When the owner has a vacancy is a time when they have the least emotional attachment to the property.
I have bought a number of houses this way. When you find an interested party, simply run the numbers and look for ways to create a win win for both you, the buyer, as well as the seller. Also keep the current tenant in mind as this is a paying customer that you may want to adopt.
4. Turnkey property providers:
It took me 10 years of working real estate before I uncovered this number one place for passive investors to find the best investment property buying source. Sellers of turnkey properties have an interesting and clever business model where they work to help investors build a real estate investment portfolio.
They buy properties at a discount; they renovate them with their own in-house construction team. They then place a tenant in these properties with their own in house property management team. They then sell these fully rented performing assets to the investor.
The win win here is the sellers have all the accurate income and expenses so they take the guesswork out of establishing income and expense. They also take the risk in the unknowns in the renovation costs. When you, the investor, make the purchase, you know exactly what the purchase price and the return on investment will be.
5. Buying turnkey properties in bulk:
To further create a win win, the sellers who buy property in bulk can get a better price. Because they buy and rehab many properties each month they get economies of scale pricing for everything. This allows them to pass a savings on to you the investor. They are motivated to do this because they are motivated to sell quickly, get their investment capital back out of the property and working on the next property.
They also are motivated to show you they can sell you a good property for a good price that gets you a good return because they know that when they do this you are in turn motivated to repeat this process with another purchase to further build your investment portfolio.
Where to find turnkey sellers
So where do you find these turnkey sellers. Most of them do not advertise directly as they are busy focusing on the acquisition and management of the properties. They use companies like mine (Equity Builders Group) who are best equipped to share all the benefits of these properties and to share the most important attribute of the investment, the location. As these sellers are busy doing what they do best they utilize our services.
To learn more about these best locations for these types of Turnkey investment properties, visit our properties page.