What do investment property buyers look for?


Quick Answer

Real-estate investors review the location, price and condition of a property before buying. Investors intending to become landlords inspect the rental opportunities for a property. Investors who want to flip a property evaluate the amount of work necessary for resale.

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Full Answer

Investors look for properties in urban or suburban areas that offer a sustainable job market. Other factors include whether the community provides viable public transportation and highly rated schools. The Census and Bureau of Labor Statistics provides information on job and population growth for locations throughout the United States. Prospective landlords make sure that rental income from a property covers and surpasses carrying costs, including the mortgage, property taxes and maintenance.

As for rehabilitation, cosmetic fixes are only minor improvements that add to the value of the property for resale. Replacing the front door, painting the building and landscaping the yard are minor fixes. Investors generally avoid properties that need new roofs, heating systems or plumbing. Occupied buildings are appealing because investors can put off improvements until the tenants move. Additionally, investors receive rental income immediately at closing. However, vacant properties look better when it is time to sell.

FreddieMac recommends that investors avoid fraudulent investment scams that include inflated appraisals.

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