How To Find The Best Rental Properties

Do you have a client who’s looking to expand their rental portfolio?

Finding the right investment property is crucial for success, and your client is trusting you to find them the best rental options. In this post, I'm sharing the best tips and strategies for finding investment properties that will generate strong returns.

Understanding Your Client’s Criteria

The first step in your search for the ideal rental property is getting crystal clear on what your client is looking for. Before you start browsing listings, take time to define all of the must-have criteria:

• Location
  Where does your client want to buy? Are they open to investing long-distance or do they want a property close to home? Consider factors like neighborhood safety, school quality, jobs, and amenities. Location has a huge impact on the desirability of rental properties.
  
  
• Budget 
  How much can your client afford to spend on a property? Don't forget to factor in closing costs, renovations, and cash reserves in addition to the purchase price. Give them tips on setting a budget with some built-in wiggle room for unexpected expenses.
  
  
• Type of property
  Do they want a single-family home, condo, townhouse, or small multifamily? Each comes with pros and cons in terms of cost, maintenance, and rental demand.
  
  
• Size and layout
  How many bedrooms and bathrooms are necessary to appeal to your client’s target renters? Is an open layout important? Do they want outdoor space?
  
  
• Amenities
  What features will help the property stand out from the competition? Think hardwood floors, stainless appliances, in-unit laundry, etc.

Having a handle on the criteria makes it much easier to zero in on properties that check all the boxes. For more guidance on setting investment goals, check out this post on real estate investing basics.

Location Factors To Consider

It's the oldest real estate cliché, but it's true - location, location, location! The location of the property is just as important as the property itself when it comes to finding rental properties that perform well. 

Here are some key factors to evaluate:

• Neighborhood safety
  No one wants to live somewhere they don't feel safe, so focus on areas with low crime. Look up crime statistics and visit the neighborhood at different times.
  
  
• Schools
  Even if you’re not sure if kids will live in the rental, good schools still matter. They impact the overall desirability and value of the area.
  
  
• Jobs
  Renters need employment, so a strong local job market is key. Research major employers, employment growth, and average wages in the area.
  
  
• Amenities
  What will attract renters to the neighborhood? Think grocery stores, restaurants, parks, gyms, public transit. Walkable areas with lots to do are in high demand.
  
  
• Proximity
  How close is the neighborhood to major roads and interstates? Is it convenient to commute to downtown or major employment hubs?

Have your client take the time to thoroughly investigate the location before settling on a property. The rewards of buying in a great spot are worth the extra effort!

Setting The Budget

Knowing the budget is one of the most important parts of figuring out how to find a good rental property that your client can actually afford. Many new investors make the mistake of crunching numbers based solely on the purchase price. 

But there are many other expenses to plan for, so you might want to talk through these first:

• Down payment (likely 20-25% for an investment property)
• Closing costs
• Inspections and appraisal
• Initial repairs and renovations
• Ongoing maintenance and CapEx
• Property taxes
• Insurance
• Mortgage payments
• Utilities (if not paid by tenant)
• Property management fees
• Vacancy costs

Adding up ALL the potential costs gives you a full picture of how much cash is needed upfront and ongoing to make the deal work. Your client should avoid overextending themselves and leave a cushion for surprise repairs. One rule of thumb is the 1% rule - aim for rental income of at least 1% of the purchase price. So for a $200K property, $2K in monthly rent would be the goal.

Deciding on Property Type and Size

Single-family? Condo? Duplex? 

The type of property affects many aspects of the landlord experience. 

Single-family homes tend to attract the most stable, long-term tenants but also require more maintenance. Condos have less upkeep but come with HOA fees and restrictions. Small multifamily properties provide more rental income but managing multiple units is more work.

Square footage and bed/bath count are also key. In most areas, one—or two-bedroom properties are easier to rent than larger homes. An extra half bath can be a major selling point.

Have your client think about their target renter and choose a property type, size, and layout to match their needs. A property that shows well and offers a comfortable lifestyle will rent faster and command top dollar.

Researching Potential Properties

With the criteria set, it's time to start searching! 

Use a variety of methods to find as many potential properties as possible. 

Online Listings and Real Estate Platforms

• MLS (Multiple Listing Service)
  This is the most common source and a great place to start. Set up alerts for new listings that match your client’s criteria.
  
  
• Real estate sites
  Zillow, Realtor.com, Redfin, etc. also pull from MLS and are easy for clients to browse.

• Wholesalers
  These investors specialize in finding off-market deals and can be a valuable source once they're ready to move quickly.
  
  
• Auctions
  Foreclosure auctions can be a way to snag properties at a discount, but come with risks. If your clients are thinking about this, urge them to thoroughly research the process first.
  
  
• Driving for dollars
  Yes, deals can be found by simply driving around and looking for distressed or vacant properties! Then track down the owner through public records.

Networking with Real Estate Agents

• Agents
  Build relationships with agents who specialize in investment properties and can send you off-market deals.
  
  
• Networking
  Let everyone know you're looking for properties that could be used as rentals. Motivated sellers are out there, and you never know who might send them your way. 

Attending Open Houses and Property Showings

While online listings and virtual tours are valuable, nothing beats seeing a potential rental property in person. Attending open houses and scheduling private showings lets you get a true feel for the property and neighborhood.

During a showing, take your time walking your client through the entire property. Look for any signs of damage, deferred maintenance, or shoddy repairs. Note the condition of big-ticket items like the roof, windows, and major appliances.

Check that room sizes feel adequate and that the layout flows well. Pictures can be deceiving! Consider whether the space is something tenants would be excited to call home.

Remember to inspect the outside, too. How does the landscaping look? Is the exterior in good shape? Note any glaring issues, like damaged fencing or a collapsing deck.

If the landlord or listing agent is present, be sure to ask key questions:

• How old is the roof? The HVAC system?
• Have there been any recent repairs or upgrades?
• What are average utility costs?
• Why is the seller selling?
• How long was the property rented previously?
• Have there been any pest or mold issues?

The answers can give you valuable insight into the property's true condition and help you and your client spot any red flags. Don't be afraid to ask follow-up questions!

While it takes extra time, physically inspecting potential rentals is an essential step to making a smart investment. The last thing your client wants is to buy a property sight unseen and end up with costly, unexpected repairs. Due diligence upfront helps to avoid unwanted surprises down the road.

Evaluating Rental Property Potential with Key Metrics

Buying right is the biggest wealth-building secret in real estate. That means having a solid system for analyzing deals and determining a property's profit potential. 

Key metrics your client should calculate include:

Rent-to-Value Ratio - Monthly rent/purchase price. Aim for at least 1%.

Cash Flow - Income minus ALL expenses. The higher, the better.

Cap Rate - NOI / purchase price. Look for 5%+ depending on the market.

ARV (After Repair Value) - What the property will be worth after any improvements. Provides room to build equity.

Cash-on-Cash Return - Cash flow / total cash invested. 8-12%+ is ideal.

GRM (Gross Rent Multiplier) - Purchase price / annual rental income. Lower is better, under 8 is great.

Your client should run multiple scenarios, factoring in a range of potential rent amounts, vacancy rates, repair costs, etc. This shows how the deal holds up in worst and best-case scenarios. 

Using an artificial intelligence tool like Leadflow’s AI Sellability Scores can also provide insight into whether a property has the potential to be a great rental deal. This is a tool that both you and your clients can use to evaluate a property’s rental potential.  

Finalizing the Rental Property Deal

By now, your client likely has a few strong contenders. To choose the best one, go back to their original criteria. Which one is the best fit? Don't let them compromise on the “must-haves” to chase a "deal." The property that they can get for a steal, but doesn't match their goals, isn't actually a deal for them.

Beyond analyzing the numbers, your client should also listen to their gut. Sometimes the deal that looks perfect on paper just doesn't feel right in person. Trust those instincts. On the flip side, warn your clients not to fall in love with a property and ignore major red flags.

If they're stuck between a couple of options, remember that you’re an experienced expert who can help them see the pros and cons that they may be overlooking. You can also suggest creative ways to negotiate a better deal.

Ultimately, it's their decision. The buyer should choose the property that they feel confident they can operate profitably for the long term; one that they'd feel good about holding even if the market takes a downturn.

Locking Up The Deal

They’ve found the one! Now it's time to make it theirs. With rentals, you'll likely need to move fast, as there's a lot of investor competition these days. Have their proof of funds and preapproval letter ready so the seller knows you have a serious, qualified buyer.

Make a strong offer, but don't go overboard with the price. Negotiating repairs after the inspection is often easier than getting a seller to budge on price upfront. Consider adding an escalation clause, which automatically raises your offer if the seller receives a higher bid.

Due diligence is critical when buying a rental property. That means thoroughly researching the property itself AND the rental market:

• Order a professional home inspection
• Check public records for past permits, code violations, etc.
• Have a specialist look at the sewer line and HVAC system
• Verify HOA docs and CC&Rs
• Research rents for comparable properties
• Analyze vacancy rates in the area
• Check for city regulations like rent control
• Review property tax history
• Get an appraisal if financing
• Walk through with a contractor to estimate repair costs

No property is perfect. The goal is to uncover any major issues BEFORE closing the deal. Many investors get in trouble by overlooking key red flags in the rush to add a property to their portfolio.

Agents and Buyers Can Use Leadflow to Find Rental Properties

Finding great rental properties takes time and effort - especially in a competitive market. The process can feel like a job in itself! Leadflow is an incredibly helpful tool for real estate professionals who want to streamline their search and zero in on the most profitable deals.

Leadflow uses AI technology to quickly sift through property data and catch the ones that you’re looking for, even before they hit the market. No more spending hours scrolling through hundreds of listings that don't make sense. Just log in to gather a curated list of the best potential rental properties that match your criteria, both on and off-market. 

Leadflow's AI algorithms can also predict when properties are likely to be listed for sale, giving you a leg up on the competition and allowing you to make your move before everyone else. You may even be able to approach owners directly about off-market deals. 

Having all this data and analysis at your fingertips saves a ton of time and headaches. You can quickly compare opportunities to find the real gems. Whether you're an experienced real estate professional or just starting to explore how to find rental investment property, Leadflow is an incredibly valuable partner.

Ready to give it a try? Check out Leadflow's pricing and plans and sign up for a free trial.

Finding the right rental property can feel overwhelming, but it doesn't have to be. Knowing your criteria, understanding what makes a profitable rental, and using smart tools like Leadflow can dramatically simplify the search. With the right process and people in place, you can find incredible deals that provide both cash flow today and long-term wealth.