Research the History and records of the property of interest.
Home sales and rental rates in the area. While you’re researching the area, spend some time evaluating some of sales figures and rental rates for nearby properties. You can look much of this information up online, or you can work with a local real estate agent who can pull the comps for you. This information will give you an idea of the value of the property, along with how much you could potentially rent it for.
The home itself. After surveying all of the above and coming to the conclusion that the property looks promising, it’s time to check it out. Schedule a time to visit the home so you can give it a thorough visual inspection and see if it’s truly something you would want to invest in. Pay close attention to any damage or repairs that may need to be made, but also look for ways in which you could potentially alter the property to make it more profitable for yourself.
The financials. This last factor may be the most important – how much the property is going to cost you, and how much you can expect to make off of it. Gather all the financial data you can to develop both cost and income reports. Some of these figures will include the sales price, operating expenses, taxes, insurance, property management fees, rent, application fees, etc. Organize this data to see if the property will be profitable and, ultimately, a sound investment.
