How to find investment properties: A guide

Investing in real estate can deliver passive income, tax advantages, and long-term wealth. Regardless of whether you want to flip houses or become a landlord, learning how to find investment properties with potential is essential to building a viable business. Learn more about how to find rental property deals, and how to evaluate opportunities, whether it's on-market listings or off-market leads. We’ll also cover key metrics and due diligence steps to help you move from interest to offer with confidence.

Key takeaways:

• Investment properties offer income, tax advantages, and potential appreciation, making them attractive for many investors.
• Suitable commercial or rental properties to buy can found via on-market and off-market resources.
• Make sure to consider location, taxes, and other costs in advance of buying an investment property.

Why buy an investment property?

Many people buy investment properties to earn rental income, build long-term wealth, and diversify their investments. A rental property can provide an additional income stream and the potential for property appreciation over time.

Demand for rental housing remains strong. According to the U.S. Census Bureau, there were about 44.5 million renter-occupied housing units in 2023 – an increase of more than 500,000 households from the previous year.

The first step in learning how to find rental property to buy is to get ready to buy. If you don't have cash on hand, you'll want to get mortgage preapproval for a single-family or multifamily home loan before you start looking for properties to buy.

How to find on-market investment properties

If you're beginning your investment property search, on-market properties can be a good place to start because they provide a large pool of potential opportunities.

An on-market property is a home that is actively listed for sale and available to the public. These listings can be easier to find than off-market opportunities because they're advertised on real estate websites, through brokerages, and on local listing services.

1. Work with a real estate agent

A real estate agent can be an important partner in your search for investment opportunities. Few people know how to find rental property in local neighborhoods, market trends, and property values better than an experienced agent.

Agents also have access to the multiple listing service (MLS), a comprehensive database of properties for sale in an area. The MLS is available only to licensed real estate professionals, giving agents access to up-to-date listing information that may not appear on public websites immediately. Because desirable investment properties can sell quickly, it's important to be prepared to act when your agent identifies a promising opportunity.

Finding an agent and developing a strong working relationship can provide a steady source of leads and market insights while saving you time during your investment property search. They can help evaluate comparable sales, identify neighborhoods with strong rental demand, and connect you with other professionals, such as inspectors, contractors, and property managers.

Even if you're interested in expanding your options through foreclosures or real estate owned (REO) properties, choosing an agent who can serve as a trusted adviser will help you navigate the buying process with greater confidence.

2. Search commercial marketplaces

If you're interested in larger investments, commercial real estate marketplaces can help you find multifamily properties, office spaces, retail centers, industrial properties, and other income-producing real estate. Websites such as LoopNet, Crexi, and CommercialSearch allow investors to browse listings, compare properties, and connect with brokers or sellers.

These platforms function like residential websites, but they're designed specifically for commercial real estate transactions. Listings often include detailed financial information, such as asking price, rental income, occupancy rates, and projected returns. This information can help investors evaluate whether a property aligns with their investment goals before scheduling a tour or requesting additional documentation.

Depending on the property and marketplace, buyers may make offers directly, participate in a bidding process, or negotiate with the seller through a broker. Some properties are marketed nationally, which means investors may be able to purchase real estate outside their local market. In some cases, investors may even buy properties sight unseen, relying on listing information, inspections, appraisals, and due diligence reports before closing. However, conducting thorough research is essential when purchasing a property you haven't visited in person.

Commercial marketplaces also can be a valuable resource for investors looking beyond traditional rental homes. For example, you may find mixed-use buildings, retail storefronts, warehouses, self-storage facilities, or apartment complexes that aren't typically listed on residential real estate websites. If you're considering this type of investment, learn more about buying commercial property.

3. Browse online auctions

Online real estate auctions also can be a helpful source of leads and buying opportunities as you embark on the search for an investment property. While some real estate auctions still take place on courthouse steps in select states, they typically occur online, allowing buyers to participate nationwide.

Note that auctions generally require buyers to have enough cash on hand to complete the sale. If needed, you can then arrange for delayed financing to take your cash out of any projects you’ve invested in and use it to finance future purchases.

How to find off-market investment properties

Not every property will appear on the MLS, and many properties may be sold via word of mouth. While the search for an off-market property can be tough, it could help you find the hidden gem you’ve been looking for.

1. Search for properties in person

One of the best sources of potential leads is to drive around a desired neighborhood and look for homes that are for sale or in relative disrepair.

Nothing is stopping you from knocking on the door, noting the property's address, looking up the owner, and contacting them to inquire about the property.

Likewise, you always have the option of putting up signs or fliers in the neighborhood, letting property owners know that you're an aspiring buyer.

2. Spread the word

Similarly, don’t underestimate the power of word-of-mouth marketing to let people know that you’re shopping around for an investment property. Letting your real estate agent know to put the word out among their network of local professionals is a good idea as well.

Talk to co-workers, friends, and family members about what you're in the market for so they know to come to you if they hear about or see any properties that might interest you.

3. Visit FSBO properties

If you do spot a for-sale-by-owner sign in someone’s yard, don’t be afraid to seize the moment. Make an appointment to visit and tour the property, talk to the owner about any necessary repairs or maintenance, and get a sense of why they’re selling.

In addition, don't forget that many investors know how to find rental properties to buy in Craigslist classified listings for their local or target market. This can be a helpful resource for finding investment properties offered for sale by owner.

4. Check out preforeclosures and foreclosures online

Preforeclosures and foreclosures can offer opportunities for patient, persistent real estate investors willing to put in a little extra work. Several online websites provide information about these properties. Investors should perform regular searches and keep an eye out for purchases to pounce on, especially at the local or county level.

5. Pursue short sale opportunities

Another source of leads for off-market properties can come from a homeowner who’s considering a short sale. This real estate transaction could result in a financial win-win for both parties by putting much-needed cash in the seller’s pocket and a potential lucrative real estate opportunity in the buyer’s hands.

For those considering these types of investments, keep in mind that short sales usually mean these homes are being sold as is.

Factors to consider during your investment property search

Determining what to look for in a good investment property depends entirely on your financial goals and plans for new real estate investments. You’ll want to consider several factors when starting your real estate investing journey:

• Location. Owning a desirable property in a popular, high-demand area that's growing economically is often the fastest way to ensure a positive return on your real estate investment.
• Property taxes. If the property you're considering has high property taxes, it can hurt annual cash flows, real estate investment profits, and your ability to resell the property.
• Repairs. Having to pay for repairs (especially parts and labor) versus being able to perform repairs yourself can also take a big chunk out of your overall profits.
• Profit metrics. Investors are strongly advised and encouraged to prepare budgets, map out financing figures, and otherwise do the math needed to understand the potential return on investment (ROI) in advance.

The bottom line: Take your time finding an investment property

Finding the right investment property takes research, patience, and a clear understanding of your financial goals. Whether you're working with a real estate agent, browsing MLS listings, exploring commercial marketplaces, or searching for off-market opportunities, it's important to evaluate each property's potential risks and rewards. Taking time to compare neighborhoods, analyze cash flow, and perform due diligence can help you make a more informed investment decision. The more prepared you are before making an offer, the more confident you'll be when the right opportunity comes along.

Ready to start your investment property search? Get started by applying for financing through Rocket Mortgage and see what loan options may be available to you.