Rental properties are an excellent investment for cash-flow-minded investors. Not only do rental properties provide a reliable cash flow, but they also provide a great deal of flexibility in terms of residency. You don’t need to live onsite to earn rental income; you can rent out a property for a few days, a few months, or even a few years. If you’re looking to expand your investment portfolio with properties that offer a high return but minimal maintenance, rental properties may be right for you.
Unfortunately, rental properties are also some of the most challenging properties to find. Investors must find properties that offer reliable returns, a sufficient return on their investment, and a landlord who will accept the rent checks and keep the property up to date.
If you’re ready to get started looking for rental investment properties, keep reading. We’ll show you exactly how to find rental properties in California that meet your requirements and meet your expectations.
How to Find Rental Investment Properties in California
There are many ways to find rental properties, but the most effective way is to use all of them. When investors search for rental properties, they often only look at properties that are available for rent. This can result in a lot of wasted time and money.
When investors look for rental properties, they should look at properties that are for sale. When they do this, they are expanding their search radius. This allows them to find more rental properties that are available for rent as well as for sale.
Furthermore, investors should look at rental properties that are listed on MLS (Multiple Listing Service). By using MLS, investors can view all listings that correspond to a given area code. This allows investors to view properties both for rent and for sale, as well as search by price, number of bedrooms, baths, and other important factors.
Investors should also look at all sorts of pre-foreclosure and foreclosure listings. These can be a great source of rental properties. Before purchasing a foreclosure, make sure you know what you are getting into. Foreclosures carry a lot of stigma and you may be facing a lot of challenges as a result. Before purchasing a foreclosure, make sure the property is in good condition. If it isn’t, walk away from the deal.
You can purchase a foreclosure months later for a much lower price, and the property will be exactly as advertised.
Investors can also talk to real estate agents about rentals that are currently listed. If you know of any suitable properties, contact the real estate agent and offer to buy the property. Once again, this is a great way to find rentals that are listed but not currently available for rent.
Once you have a general idea of the type of properties you’d like to invest in, your next step is to do some research. This will help you find properties that meet your needs and expectations.
When doing your research, be sure to keep the following criteria in mind:
- The type of property you want to invest in
- The location of the property
- The price of the property
- The rental history of the property
- The condition of the property
- The neighborhood of the property
- The availability of financing for the property
- The tenant pool of the property
- The potential return on your investment
Look at Foreclosures
One of the best ways to find rental properties is by looking at foreclosures.
Foreclosures usually fall into one of three categories: bank-owned, government-owned, or privately-owned. When looking at foreclosures, be sure to keep the following criteria in mind:
- The bank-owned properties may be able to be purchased for as little as $500. However, they often sell for much more.
- The government-owned properties are often uninhabitable and unsellable. However, they may qualify for tax credits and grants that can reduce the price of repair.
- The privately-owned properties may be able to be renovated and sold for a profit. However, many of these are in need of repair and may not be worth the effort.
- Be sure to check all of the Diagnostic Service Providers (Dips) reports for the property. This will help you identify any issues with the property, such as a lack of power, running water, or a health code violation.
- Before purchasing a foreclosure, make sure you know what you are getting into. Foreclosures carry a lot of stigma and you may be facing a lot of challenges as a result.
- Before purchasing a foreclosure, make sure the property is in good condition. If it isn’t, walk away from the deal. You can purchase a foreclosure months later for a much lower price, and the property will be exactly as advertised.
Talk to Real Estate Agents
Real estate agents can be a great source of information because they generally know more rental properties than landlords do. However, talk to real estate agents with care. Real estate agents make money from the rental properties they sell, so they may have a financial incentive to sell you a property that isn’t right for you. Before talking to a real estate agent, make sure you have a clear idea of what type of property you’re looking for and exactly where you’d like to live.
Find Rental Specific Properties
If you’re looking for a specific type of rental property, you may want to consider using a rental specific property search engine. These services allow you to enter the details of your desired properties and receive multiple matches.
Some rental specific property search engines allow you to set parameters, such as the area you’d like to search in, the price range of the properties, or the number of bedrooms you’re willing to live in. Once you’ve found some suitable properties, call each one and offer to rent it. This is a great way to find rentals that are listed but not currently available for rent.
Get pre-approval for repairs
Before purchasing a rental property, make sure you have permission to make any repairs. This will protect you from having to return a property that isn’t worth the hassle. Ideally, you want to find a rental property that is in good condition, but need to make sure you have the authority to make any repairs.
When purchasing a rental with the hopes of renting it out quickly, be sure to get pre-approved for the repairs before signing a lease or rental agreement. This will protect you from having to return a property that is uninhabitable.
Now that you’re aware of the types of properties you can find to invest in, and the steps you need to take to find them, it’s time to get started finding rental properties. The best way to do this is to reach out to the experts at LBC Mortgage. Our knowledgeable and professional lenders can help you find the best rental investment properties in California that meet your needs and your budget.