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What to Look for in an Investment Property

Real estate investing is an amazing way to diversify your income. If you invest right, you could soon be on your way to a brand new revenue stream.

However, when it comes to making money with an investment property, it’s so important that the right research is done ahead of time. Since this purchase is going to be a lot different from buying a primary residence, here are some things you’re going to want to look for:

The Neighborhood

With any investment property, the neighborhood is going to play an important role. Before you even consider looking at a property, try to pinpoint the exact location you’re interested in and who your tenants may be. For instance, if you’re looking at properties near a hospital, then there could be a good chance your tenants will work there.


When you buy an investment property, you often have to think about the tenant. If you plan on luring in good tenants, the area must have a low crime rate. Cities with higher crime rates tend to lure in deadbeat tenants, vandalism and even serious crimes.


If you want to lure in as many tenants as possible when your home is up for rent, a good school district is going to help. Good districts tend to bring in hardworking families or tenants who plan on having children in the future. Keep in mind that homes in a good school district will typically have a higher price and tax rate.


Unless you plan on renting out to retirees, you’re going to want to consider an area that is filled with jobs. The more jobs that are in the area, the higher the demand will be for your rental. To potentially score a deal, keep your eyes peeled for upcoming corporations moving into a particular area.


Just like the jobs, a tenant will want a lot of things to do in their free time. When researching an area, try to see how many shopping malls, theaters and attractions are in the area. Generally, the more there is to do, the more attractive your property can be.

via Taxes

The property taxes are going to take a good chunk of your profits every month. While you may find an investment property in a desirable area, it’s so important that you research the tax numbers.

If the numbers don’t add up, it may be ideal to move to another town. Tax rates can typically be found on the real estate listing or through the local tax assessor’s office.

Rental Rate

The whole point of buying an investment property is to make money. Since it would be silly to buy a property that makes you no money, it’s essential that you know how much your potential rental is going to go for.

Craigslist and Zillow are both great resources to check active rental rates. When researching, use comparable square footage, number of rooms and try to look within the area you’re looking to buy. By doing so, it should offer you a good estimate.

Every state will have great cities and of course, there will be bad ones as well. It’s your job to research as much as possible. Aside from using the Internet, get out and talk with renters, meet with a real estate agent and even consider joining a local real estate investor club.

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