Once you make the decision to join the lucrative career of real estate investing, you now have to figure out how to find rental properties for sale. Yes, you can find a plethora of resources by doing a quick Google search, but how do you know if the advice, tips, and tricks actually work? How do you know the information you find isn’t outdated? Heck, how do you know the information wasn’t parsed from conflicting sources?
Luckily, that’s where we come in. We strive to bring you information that you can trust and rely on at every step of your investing journey, whether you’re trying to find that perfect first rental property or if you’re weighting the pros and cons of venturing into commercial real estate. We’ve helped more than 150,000 investors, and we’re eager to help you, too.
With that said, let’s address the question at hand.
How to Find Rental Properties for Sale: Choose a Good Location
When you first begin your search for real estate, you need to know where to look. You might find a property that’s really affordable and looks like it needs minimal work before you can rent it out. But you have to ask yourself if the property is located in a neighborhood where your ideal tenant would want to live.
Factors That Play Into a Neighborhood’s Desirability
When you’re trying to determine whether you’d like to buy into a neighborhood, you’ll want to look at a few key factors. These include:
- Target Demographic: Ask yourself what kind of tenants you want to appeal to, and that should help you analyze the neighborhood in which you’re thinking about buying an investment property. For example, let’s say you want to rent to the newly retired crowd. You might want to avoid neighborhoods near colleges or “party” towns like New Orleans, San Francisco, or NYC and buy in a neighborhood with (or near) a golf course or two, good healthcare options, and decent weather. Likewise, if you’re hoping to appeal to young professionals with children, you’ll want to buy in an area with access to public transportation, good schools, parks, and recreational activities.
- Vacancies: You should look into the area to see if there are a lot of vacant rental properties before settling on a neighborhood. You shouldn’t choose a place where there are a lot of vacancies because that means there simply isn’t enough demand, and you may have a hard time finding a tenant. An ideal neighborhood would have few vacancies but plenty of people eager to live there. You’ll need to take some time to keep an eye on when properties become vacant and how quickly they’re filled. Typically, the demand for rentals spikes during the summer months.
- Job Market: If you want to find reliable tenants who’ll pay rent on time, all the time, then you’ll want to ensure the neighborhood has a thriving (or even growing) job market. You can analyze the job market by checking with the Bureau of Labor Statistics to find the unemployment rate, job openings, wage growth, and so on.
- Property Taxes: Property taxes can vary significantly from one part of the neighborhood to the next. If you’re thinking about buying a property in a nice area, those high property taxes might not be that much of an issue, as long as you’re able to find long-term tenants. You can go to the county office and ask for the tax records of a particular property you’re interested in, or Google “Property tax search (desired county and state).”
- Crime Rates: Areas with high crime rates aren’t going to be the best place to buy an investment property. No one wants to look over their shoulder every time they need to take out the garbage or take the dog for a walk. There are various websites you can use to learn about the local crime rates. These sites include the FBI’s Crime Data Explorer, Crime Grade, Area Vibes and Neighborhood Scout.
Note: If you use Area Vibes and Neighborhood Scout, you’ll learn a lot more about a neighborhood than just crime rates. These sites assess a city’s livability based on various factors like crime, housing, health and safety, and more.
Credit: AreaVibes
How to Find Rental Properties for Sale: Know Where to Look
After settling on a neighborhood, you now have the task of actually looking for a rental property you’d like to buy. Fortunately, there are a lot of ways you can go about this.
1. Work with a Real Estate Agent
The most obvious option is to hire a real estate agent to help you find rental properties. No one knows the neighborhoods and markets where you’re considering buying property better than a local agent. Additionally, they have access to the MLS (Multiple Listing Site), which is only available to those with a real estate license.
Keeping this in mind, if you can establish a solid rapport with a reliable real estate agent, they may provide you with a constant stream of leads and tips, and you can devote more time to managing your rentals if you aren’t hiring a property management company to do it for you.
2. Online Listing Sites
We all know about sites like Trulia, Zillow, and Realtor.com, but there are other online listing sites that work just as well (if not better) for finding rental properties for sale. For example, if you’re eager to work with knowledgeable real estate agents who specialize in investment properties, our agents can help you navigate New Western’s Marketplace to find the perfect property to start (or grow!) your investment portfolio.
Other online listing sites include:
- RealtyTrac
- Auction.com
- FSBO.com (For Sale by Owner)
- and, of course, Craigslist
3. Social Media
It might be hard to believe, but social media can be used for more than just sharing photos of your pets, your vacations, or that hilarious meme you can’t stop laughing at. There are a lot of Facebook groups you can join to get leads, tips, advice, and even funding.
These pages include:
- Real Estate Investors: A public group with 72k members and more than 10 posts per day.
- Real Estate Investor Network 2.0: A private group with 1.5k members and more than 10 posts per day.
- Real Estate Investor Group USA – Wholesaling – Off Market – FSBO: A public group with 6.7k members and about 3 posts per day.
- Any of the New Western-location-based groups
4. Wholesalers
You can find some pretty good deals by going through wholesalers. These are people who buy properties at below-market prices (anywhere between 20% and 50% below market value) and then resell the property at a bargain price, usually 5% to 10% higher than the original price. For example, the wholesaler buys a property for $100,000. They then sold that property for $11,000. The wholesaler made a 10% profit.
Do be aware that these properties are usually in disrepair and require a lot of work, but that isn’t always the case. For example, if you are a member of the New Western Marketplace, you’ll have access to wholesale houses for sale that won’t require extensive work, which means you can put the property up for rent all the quicker.
5. Court Auctions
Court auctions are another good way to find rental properties for sale at a good price. The properties that are being auctioned off are either going through foreclosure or they’re being auctioned off to satisfy a tax debt. Either way, these properties are usually sold much cheaper than if they were sold through traditional means. In some instances, you could buy a house for 50% lower than the property’s market value.
Be aware that buying a property via auction is a bit of a gamble because you’re basically bidding on a property sight unseen. Homeowners can be vengeful when they’re kicked out of their property, and they may destroy the property.
6. Contact Sellers Directly (Drive For Dollars)
When searching for potential rental properties by driving around different neighborhoods (also known as driving for dollars), you may come across properties that show signs the homeowner may be going through some tough times, be they financial or personal, and can no longer keep up with the demands of owning a home.
These signs can include (but are not limited to):
- There’s a lot of newspapers in the driveway, and the mailbox is stuffed.
- There are signs of neglect like broken windows, peeling paint, sagging gutters, etc.
- Unkempt landscaping like tall grass, untrimmed hedges and trees, and flower beds are full of weeds and dead flowers.
In this case, you could try reaching out to them in a polite and considerate manner to see if they’re interested in a short sale. They’d get rid of a distressed home (LINK TO DISTRESSED HOME ARTICLE WHEN PUBLISHED) and have cash in their hand, and you’d get a great deal on a property with a lot of potential. It’s a win-win.
You can find court auctions, foreclosures, and short sales by going to reputable foreclosure websites. These sites include:
Note: Just keep in mind that these distressed and foreclosed homes are generally sold as is, and that may mean you’ll need to sink a lot of money into making the repairs.
7. Bank-Owned Real Estate (REO)
When a foreclosed home doesn’t get auctioned off, it becomes the property of the bank. Bank-owned real estate (REO) is sold as is, but unlike getting a house at an auction and bidding sight unseen, buyers can actually get inside to scope out the place and get it inspected.
The awesome part about buying bank-owned real estate is that the properties are usually listed below market value, and there’s even a possibility of negotiating for lower prices and better terms. The longer that the bank owns the property, the more money they’re losing. They want to get rid of the property, even if it’s at a loss.
Some of the places where you can find bank-owned real estate include:
- HUDHomesUSA.com
- Some banks allow you to search properties they own
- Public records
Finding Rental Properties FAQ
Q: What’s the difference between buying a rental property with a tenant and a vacant rental property?
Some investors look for vacant rental properties for sale, while others prefer occupied properties. There’s no right or wrong way to go about it because there are pros and cons to each.
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Q: How much of my budget should go toward renovations?
A: It’s a good rule of thumb to set aside 10% of your budget for renovations and repairs. Once the property is rented, you should still aim to set aside 10% for any repairs that may need to be addressed along the way.
Q: Which is more profitable? A single-family rental property or a multi-family property?
A: Multi-family properties can generate more income, to be sure. However, with a multi-family property, you’re taking the pros and cons for all the units, rather than just a single property. So, while you could buy a duplex, you’re going to have to worry about 2 existing tenants and leases (or filling 2 vacant units). You’ll have 2 units you’ll have to repair, renovate, and maintain.
It really depends on how much risk you’re willing and able to take on.
Q: Do I need a property management company to handle my properties, or can I do it all myself?
A: No, you do not need to hire a property management company to handle your rental property… But they can provide you with peace of mind so you can focus on your investment portfolio. Keep in mind that hiring a property management company will be an additional expense and not all PM companies are the same.
You can learn more about the pros and cons of property management vs being a hands-on landlord here.
How to Find Rental Properties for Sale: Final Thoughts
Investing in real estate can be one of the most thrilling ways to generate passive income, build generational wealth, and be your own boss. In the beginning, it’s not going to be easy and you’re going to have to learn a lot along the way. But, you know what? We all have to start somewhere!
There are many different ways you can go about finding investment properties, and none of them are the “wrong” way. Depending on your finances and the location, you could buy the first house a real estate agent takes you to. Or you could keep an eye out for the latest foreclosed properties that are go up on the auction block. It really depends on your specific goals and where you want to take your investing career.
But, you know what? That’s the awesome part about beginning your career in real estate investing with New Western is that you have a wealth of information right at your finger tips. So once you close on your first rental property and you’re a bona fide landlord… You can trust that New Western will be there every step of the way. We won’t leave you to your own devices once you figure out how to find rental properties for sale.
