Researching Investment Properties

5 Tips on Researching Investment Properties

Researching investment properties is an essential requirement before you decide where to put your money. It’s important to take out time to conduct thorough research and not just rely on someone else’s opinion. If you are a beginning investor, you will want to follow these five tips to ensure you select a property that will provide you with a good return on investment.

Tips on Researching Investment Properties

Tip 1: Get to Know the Neighborhood

Your property’s value will be determined partially by the surrounding area. Find out as much as you can about the neighborhood. Drive by at different times of day to get a feel for the community. Is it a bustling neighborhood during the day and silent at night or do you see families out in the evenings with a quiet environment during the day?

Take it a step further and get out and walk the neighborhood. Go inside the businesses and meet the people who work and live in the area. Some of the best investment properties are located in areas that make not look all that appealing but are primed for growth. Others are just in depressed neighborhoods with no future plans for improvement. Make sure you avoid the second and recognize the first.

Related: Top 5 Major Cities for Buy-and-Hold investment Properties

Tip 2: Check for Future Development Plans

Talk to the city government to find out if any plans are in the works for new developments. This will tell you if people are moving in the area or out of it. Ask if new jobs are coming to the neighborhood or even nearby areas. This will let you know if more people will be interested in housing, and if your property will increase in value.

As you talk to various officials and business owners, you’ll get a feel for what’s happening in the area. You may have to use your own instincts as to whether the neighborhood has potential, but you’ll be armed with a lot of information from those who are directly involved in the community.

Tip 3: Get Information on Property Comparisons

Talk to a real estate agent like Mike Putnam Real Estate for a list of properties that have sold recently in the area where you are researching investment properties. Find out what price properties are selling for to determine if it fits in your budget.

You can also learn how much the property was listed for compared to the final selling price to determine how competitive the market is in the area. You will also want to figure in any additional costs, such as utilities, especially if they will be included in the rental price. This will give you a better idea of the bottom line.

Related: 5 Must-Have Features of an Income Property

Tip 4: Find Out About Local Rents

If your goal is to rent out a residential property, you will want to know the potential for income before you make the purchase. If you are focused on multi-family units, you should determine the current rent being charged as well as what other properties are charging to get an idea about income and future growth.

For long-term investors, you will want to talk to your real estate agent to determine if rents will being going up in a neighborhood that is growing or if opportunity is stagnant in the area. You can review local statistics, such as population growth, median income and taxes to determine the viability of investing in a particular area. Much of this information can be found online through state and local government websites.

Tip 5: Visit Properties for Sale

One of the most important steps in researching investment properties is to actually visit them in person. Have your real estate agent take you to several properties, including some you may not be interested in. Touring these properties within your price range will give you a better view of value in the neighborhood and an ability to see what is available and how it will appeal to your intended renters.

You can also use this opportunity to discuss the nearby properties with your realtor, including local businesses, the school district and public transportation. They will provide you with a wealth of information if they are knowledgeable about the area. Use this data to support what you discovered on your own tour of the neighborhood.

When researching investment properties, you want to take your time to find out as much information as you can. The neighborhood is often as important as the specific property to determine if you will make a profit on your purchase.

Related: 8 Steps to Finding an Airbnb Investment Property

How do you search for properties? What do you look for in a property? What do you look for in a neighborhood?

Originally published at