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How to Find Investment Real Estate

Updated on September 12, 2012
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Perhaps you've read a book or article about someone making millions of dollars from investment properties or maybe you have a friend who owns a couple of rentals and doesn't need to work. Regardless of the reason, you are interested in getting involved in the world of real estate ownership. The next step is to find a great property to buy.

Although there are many challenges that come with owning real estate, the financial payoff can be significant. After all, many people either make their living from real estate (Donald Trump), or place their savings in real estate to grow their wealth.


Where to Find Real Estate to Invest In

The internet is the number one place to do research to find investment real estate. Although working with a good real estate agent can be beneficial, it is always a good idea to have a solid understanding of what you are looking for, how much it should cost, and the type of investing you are planning on doing before speaking with an agent.

While there are many great real estate resources available online, there are four that I have used extensively and believe will be of value to anyone interested in finding a great deal on investment property.

Zillow.com and MSN Real Estate:

Both of these websites provide large real estate listings covering the entire country. The search criteria make it possible to search by price, number of rooms, square footage, etc. Both of these sites are ones every investor should become familiarized with. In fact, it would be a good idea to spend a minimum of several hours on these sites before even considering purchasing real estate.

NOTE: The purpose of looking for real estate on these sites is NOT to purchase it. Although you may purchase from these sites later, the purpose is to do research. Consider the price range that you are available to invest and start examining houses in that value range. Look at the condition, size, and location of these properties. Zillow has a great option where you can view what other properties in the area have sold for recently - this allows you to know what people are willing to pay for a great property.

Check Out Foreclosure.com

After doing research on the value of property in the area, it is time to start finding great deals. An excellent place to find inexpensive properties is by looking at foreclosures. Because of the banking crash, there are many of these around the country. By all means consider purchasing foreclosures because you are already paying for them! Your tax dollars are used to bail out the banks - therefore, you may as well benefit from that by finding cheap property to buy.

Although Foreclosure.com costs about $40/month, you can get a free 7-day trial that may be enough for you to find your great deal. Or, if you want to purchase multiple properties, you may just want to maintain a membership on the site.

Take a Brief Look at Auction.com

If you live in a smaller community you may be able to get a great deal on real estate from Auction.com. This site is where banks auction off properties they haven't been able to sell. Although the bigger cities often have enough people bidding to make the property sell for more than would make it a good deal, great opportunities can be found in smaller communities.

There may not be properties listed in your area consistently, but when their are, they will be worth looking into.


Here is the $10,000 house I purchased on 2.3 acres of land. Although there is a bit of work that needs to be done, after being fixed up it will easily be sold or rented out with a significant return.
Here is the $10,000 house I purchased on 2.3 acres of land. Although there is a bit of work that needs to be done, after being fixed up it will easily be sold or rented out with a significant return.

Considerations When Looking for Investment Property

One of the most beautiful things about real estate is that there are constantly incredible deals to be found. Although some properties are better bargains than others, if you spend some time doing research, it will be very easy to find a great deal at a great price.

It is important, however, to remember that not every deal is a good deal. There are many things to think about before purchasing a property.

You Make Money When You Buy, Not When You Sell

The Rich Dad Poor Dad writers state that you make money when you buy. As everyone knows now, there is no guarantee that the value of a house or building will increase. The key is to make sure that you are going to make money when you purchase it - don't plan on the value increasing. If the property will pay for itself after five years of rent, then it is considered a good investment.

If you find a beautiful house that appears to be a great deal and you would certainly live in it, but the rent you would get for it would require 10 years to pay it off, keep looking. Sure, this may be a great investment for a homeowner, but rent is all about cash flow. The faster you start making a higher profit, the better.

How Much Maintenance Are You Able to Do?

The largest cost of rentals is repairing and maintaining them. This is even more expensive if you pay someone to do everything. Often times, when someone quotes you for a repair job, half of it (or less) is the cost of the material, the rest is the cost of labor. These costs can cut into your profits and shrink them down to nothing in very little time.

Determine what you are able to do on your own and make sure that there are no large repairs that will need to be done without being aware of them before purchasing the property. Paying people to make repairs is perfectly fine, just make sure that it has been taken into consideration before purchasing.

Know the Neighborhood

The property that I have just purchased for $10,000 is in a rundown neighborhood. The reason it was foreclosed was because the owner lived 3 hours away and failed to keep an eye on the property. Because of the location, the tenants chosen were not the best and they completely trashed the place.

It is MUCH BETTER to purchase real estate in a community you are familiar with than searching the country for great deals to purchase something cheap that's 2000 miles away.

Know You Can Make the Payments

Even if you are stretching yourself to purchase an incredible property, make sure that you have a solid business plan so that you know how you will handle your financial situation. Consider the costs needed to repair and maintain it (including taxes and any utilities the renter won't pay) and think about how long you plan to hang on to it and when you will sell.


Start Your Investment Property Search!

Now that you have a general idea of what to look for, start looking. It is better to start looking as soon as possible, even if you don't plan on actually investing for several months or years. The better you get to know the area you will be investing in, the easier it will be for you to spot great deals that will add a nice income to your portfolio.

Good luck as you start out! Share your experiences and tips below to benefit others interested in getting started in real estate.

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    • Simone Smith profile image

      Simone Haruko Smith 5 years ago from San Francisco

      What excellent resources and practical advice. I had heard of some of those sites, but not forclosure.com. Very cool.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Awesome site! I will look into it more and then post it on this article. Thanks for sharing.

    • dpsimswm profile image

      dpsimswm 5 years ago from Richmond, Virginia

      Try homepath.com for Fannie foreclosures.

    • rex michaels profile image

      rex michaels 5 years ago

      Great Info! A must read before considering an investment.

    • profile image

      Blue Fern Real Estate 5 years ago

      Great article Robert, what do you think about short term investment vs. long term? There’s not much difference between a family looking for a new home and an investor – both see owning real estate as being a long-term investment. If you’ve got the ability to buy, there are some great houses on the market right at the moment, so now’s the time to think about making the decision to buy.

      Why buy rather than rent? It comes back to the fact that with few exceptions, owning property is a good long-term investment strategy.

      Would love to hear your opinion on this as well!

      For our blog see: bit.ly/BlueFern

      @BlueFernRE

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Good point greatstuff! There are actually a lot of people who have investments far away. In fact, I know a guy who owns property all around the world. My recommendation for people just starting out is that they start close to home. But it isn't a requirement!

    • greatstuff profile image

      Mazlan 5 years ago from Malaysia

      Robert, another awesome article from you. Actually if you find a good buy, but the property is far away, you just have to spend a bit more to get an agent to manage and care for that property, if it is financially viable!