Successful real estate investors have mastered the art of keeping their deal pipelines full.
The key to finding great investment properties is to have a lot of options available so that you can pick and choose the opportunities that match your real estate investing strategy and goals.
Here are 12 ways to find investment properties, even in markets with more buyers than sellers.
Key takeaways
- Knowing how to find investment properties is essential in an ultracompetitive industry like real estate.
- The growing demand for rental property can make good investment property hard to find.
- By using multiple methods to source prospective deals, investors can find good rental properties faster, before they are listed to the general public.
12 ways to find investment properties
If 2022 is the year you’re ready to dive into real estate investing, these are some of the best ways to find properties.
1. Roofstock Marketplace
The Roofstock Marketplace is an online platform for buying and selling investment properties, including single-family rentals (SFRs), small multifamily properties like duplexes and triplexes, and short-term vacation rentals. Investors can often find rental property with better potential returns by looking in secondary and tertiary markets.
Since its launch, investors have completed more than $5 billion in residential investment property transactions on Roofstock. The company’s cutting-edge technology and innovations are used by both first-time investors and global asset managers to build and scale investment property portfolios.
Every investment property listed for sale on Roofstock includes:
- Property details, such as photos and neighborhood information
- Due diligence documents, such as property inspections and title reports
- Interactive tools for projecting returns and cost estimates
- Current lease and rent payment history if a tenant already occupies the home
Deals can be transacted entirely online with a Roofstock team member assisting throughout the whole process. Buyers can get preapproved by a lender to strengthen an offer and request referrals to local property managers to handle the property's day-to-day operations after escrow closes.
2. Buy- and lease-agreement
Rising home prices in many markets across the country are increasingly putting the American dream of homeownership out of reach. Many people want to own a home but simply can’t afford to buy one.
Home Partners of America (HPA) is a private real estate investment trust (REIT) that specializes in the rent-to-own sector. The company buys homes for responsible people who can’t obtain a mortgage, rents the property back, then offers the tenant the opportunity to buy the house in the future. Currently, HPA manages over 17,000 SFRs across the country.
Smaller investors can employ a similar strategy by having prospective tenants locate a home they’d like to own, agreeing to a long-term lease, and buying the house with a tenant already lined up. A portion of the monthly rent can be applied to the future purchase price, or the lease agreement could include an option to buy the home at a later date.
3. Real estate agent (investor-friendly)
There are over 3 million active real estate licensees in the U.S., according to an estimate published by the National Association of REALTORS®, but that doesn’t mean every agent has the experience to work with real estate investors.
An investor-friendly real estate agent is an individual who understands why investors buy rental property and what investors look for. They work in real estate full time, are skilled at analyzing potential deals, have an extensive network of contacts, and may have access to off-market properties or pocket listings.
Investor-friendly real estate agents have access to the local multiple listing service (MLS), which may be a good source for finding motivated sellers with homes that have been mispriced or undermarketed by less experienced agents.
4. Real estate listing websites
Searching on real estate websites is another way to find investment properties. Although scouring listing websites may be time-consuming, finding a home that might make a good rental property is always possible.
Popular real estate listing websites include Realtor.com, Zillow, Redfin, Trulia, Homes.com, HomeFinder, and MLS.com.
5. Property management companies
Property management companies manage homes for other real estate investors. They can be a good resource for finding investment properties that are move-in ready if a current client is willing to sell. Good property managers have their fingers on the pulse of the local real estate market and know which neighborhoods are hot or not, what amenities renters are looking for, and how much fair market rents really are.
6. Fix-and-flippers
People who fix and flip homes purchase property at a below-market price, renovate to increase property value, and resell the home as quickly as possible. Connecting with a reliable fix-and-flipper can be an excellent way to find investment property ready to rent out because renovations have already been done to increase the monthly rent price.
7. Wholesalers of real estate
Investors willing to handle renovation work themselves may find working with a real estate wholesaler an excellent way to find investment property with instant equity. Unlike a fix-and-flipper, a wholesaler doesn’t close on the deal or do any of the needed renovations. Instead, wholesalers locate motivated sellers, put the property under contract, estimate repairs and after repair value (ARV), then assign the purchase and sale agreement to another investor in exchange for a wholesale fee.
8. For sale by owner
For sale by owners (or FSBOs) are homeowners, wholesalers, flippers, and other investors who sell property themselves instead of listing with a real estate agent on the MLS. Sometimes FSBOs want to save money on the sales commission. Other times, the home requires repairs that a seller can’t afford to make, or an FSBO faces foreclosure and needs to sell quickly.
Popular websites for finding FSBO homes include FSBO.com, ForSaleByOwner.com, Houzeo.com, Flat Fee Realty, Fizber, and Craigslist.
9. Auction property
Lenders who foreclose on homes frequently offload properties by auctioning them off. Buying from an auction can be a good way to purchase a home below market value. However, auction properties are typically sold “as is” and may require a significant amount of work to get the home rent-ready.
Property can be purchased by attending a local courthouse auction or from online auction sites for real estate like Auction.com, Foreclosure.com, RealtyBid.com, and Hubzu.
10. Bank-owned real estate
Bank-owned real estate, also known as REO or “real estate owned” by a bank, can be another source for finding investment property. Banks don’t want to be in the real estate business and, after foreclosing on a home, are eager to get a nonperforming asset off their books. As with auction properties, REO homes may need a lot of repair work, and buyers should be prepared to pay in cash or already have financing lined up.
REO can be found by contacting the REO department of a bank or searching a site like RealtyTrac to find foreclosed, distressed, and defaulted properties.
11. Real estate investing groups
They say that networking determines your net worth, and that’s especially true when investing in real estate. Networking with other real estate professionals can be a good way to find investment property and form relationships that may pay off down the road. Fellow investors may be able to make referrals to wholesalers and fix-and-flippers or even be willing to sell some of their own rental properties.
Attending local real estate investing clubs, joining the BiggerPockets forums, and signing up for Roofstock Academy are 3 good ways to connect with fellow real estate investors in person and online.
12. Word of mouth
You may already know someone who knows someone who knows someone who wants to sell their home. While it may take more—or less—than 3 degrees of separation, word of mouth is another good way to find investment properties.
Spread the word that you’re looking for investment properties by talking to friends, family, neighbors, business associations, and other real estate practitioners, such as lenders, escrow officers, appraisers, home inspectors, insurance brokers, and even current tenants.
Final thoughts
There’s no single way to find investment properties, so successful investors use multiple methods to keep their pipelines full of prospective deals. When looking for an investment property, consider factors such as home value and rent price trends, job and population growth, percentage of homes occupied by renters, and neighborhood quality.
