4 Tips for Finding a Good Investment Property
Here are some tips about finding good investment properties that I learned from Robert Kiyosaki.
Once you’ve decided to venture into real estate investing, you’ll want to find your first good property. What’s the first step? Finding a location or area that you like. Once you’ve found that good area, you’ll want to find the best property there.
In the beginning, the process of finding a property may seem a little overwhelming, but with the right knowledge, it can actually be easier than you think! Here are 4 tips from Robert Kiyosaki to keep in mind as you begin your search for the perfect investment property. Let’s take a look at some things you can do to help narrow down your search:
1. Don’t be afraid of “ugly” properties
Remember, location is always the most important thing. So once you’ve found a good location, don’t let an ugly or unattractive property turn you off. In fact, some investors actually like ugly properties, because it gives you a challenge.
Even if you aren’t ready for doing any kind of big work, lots of ugly properties are only ugly in a cosmetic way- and the good thing about cosmetic updates is they are typically cheap and easy to do.
Now, if the roof is caving in and the property is unlivable, that might be more work than you are willing to put in. But, maybe the paint color doesn’t match, or the kitchen cabinets are outdated, or the front yard could use some landscaping. All those things are not only easily fixable but also quite cheap in terms of improvement.
One good rule of thumb is to find the ugliest house in the best area. Like we mentioned before, location is the most important thing, so if you can find an easily fixable house in a great area, there’s a good chance that you can make improvements quickly and find a renter.
Remember: time is money- you’re looking for properties that you can quickly fix up.
2. Look at multiple properties
You’ll have to look at many properties before finding one you like, and that’s okay. Even if you love the very first house you see, don’t get too attached to it! In fact, it’s recommended you look at 100 properties before deciding to close on one- not only does this give you a good idea of what the properties in your area look like, but it also can help you figure out if you’re getting a good deal on the one you pick.
If you can find multiple houses for sale in one neighborhood, that’s even better! Look at them all, compare and contrast the prices and the quality of the house, and go from there.
3. Find a good broker
When looking for a broker, you want to find someone you like and can easily work with. But not only that; you wan to find someone who understands you and the mentality behind investing as opposed to home owning.
Many brokers will only work with home owners, so make sure you find a broker who not only works with investors but understands them as well. Lots of brokers are actually investors themselves, so if you can find one who does both, that’s your best option.
Once you’ve found a broker that you like, there’s a few questions you’ll want to ask them:
- What are your top three investment properties?
- What’s the best deal you have?
- Why are these properties/deals so good?
You will want to avoid a broker who answers these questions with something like “they’re all good!” or doesn’t have a concrete answer to why the ones they have picked are the best. You don’t want a speculator, who want someone who has real knowledge of the market and the properties surrounding you, as well as the value of the home. Make sure your broker is looking at the market, not the individual house.
One last tip: make sure you pay your broker well! If they do a good job, reward them for it.
4. Look at the property from a renter’s point of view.
Now, since you won’t be living in this house, it doesn’t matter if you personally like the house or not. However, that doesn’t mean you don’t want the house to look nice. If you have an unappealing or unattractive house, it will be difficult to find a tenant and you won’t be able to charge as much in rent.
So, think of things that a tenant will be looking at. Here’s a couple of things to keep in mind:
You want the house to look nice from the street. That means well manicured, clean, and well-kept. Like we mentioned before, don’t be scared of ugly properties, just make sure they are easily fixable. For instance, if the yard could use some maintenance and some windows need to be replaced, those are easy cosmetic fixes that will raise the quality and value of the home.
The interior of the house
Obviously, renters will want to live somewhere that is nice on the inside. So take a look at the carpets, the walls, and the hardware of the home. Carpet cleaning, giving the walls a fresh coat of paint, and replacing hardware are all things that are easy and cheap to do.
Oftentimes you may find old houses that have some dated designs and features, and that’s okay. Just make sure the items themselves are good quality, and it will be easy to update them and make them a little more modern.
Everyone, but particularly families and people with children, will want to live in a house that is safe and secure. So things like good locks, strong fences, and safe places to store things like their car and outdoor equipment are very important. A house with a garage and a shed is always a plus!
Number of bedrooms and bathrooms
Of course, this will depend on the market you are renting for. If you are investing in a property that has a large population of college students and young adults living alone, a one bedroom one bathroom should be sufficient.
However, if you are renting the an area with families or where people tend to live with roommates, you’ll want as many bedrooms and particularly bathrooms as possible, and you’ll want the ratio of bedrooms to bathrooms to be as close as possible. Two bathrooms is always a plus!
Now that you’ve looked at as many properties as possible (remember, try to look at 100!), and decided on the ones you like, it’s time to play the numbers game. Analyze the cost of the home, the amount you will be able to charge in rent, and what it’s going to cost to make the improvements that you need, and figure out if it’s going to be a lucrative investment for you. If you find that you’ll be spending more money than you will potentially make, skip it. But if the numbers match up and it looks like you’ll make a profit, it’s time to pull the plug and submit an offer on that house. Good luck!